By Greg Konieczny of Templeton Emerging Markets Group
Following presidential elections in Romania last month and the surprising but positive victory of Klaus Iohannis, there was one key development that we, as a major investor in the market, really wanted to see: namely, for the government to pledge to reduce its budget deficit and commit to a new loan agreement with the IMF in 2015.
If an agreement is signed following negotiations between the government and the Fund this week, it will further prompt Romania to implement reforms and increase fiscal predictability. Read more
The Bucharest Stock Exchange is the largest bourse in post-communist south-east Europe and for spells in the past decade has been ranked as one of the world’s best-performing.
Now the exchange and its new largest shareholder have set their sights on becoming a financial hub for the region, eyeing MSCI emerging-market status within three years, substantial increases in capitalisation, and greater participation by foreign investors and pension funds. Read more
Romania is set for a period of political uncertainty following the shock victory of liberal Klaus Iohannis (pictured) in a presidential election on Sunday. With 96 per cent of the votes counted, Iohannis was in the lead with nearly 55 per cent, an unexpected triumph over Prime Minister Victor Ponta of the ruling Social Democrats (PSD).
Ponta will now face calls to stand down from the premiership, even though he has said he is determined to stay on as Romania prepares to draw up its 2015 budget, paying for a pre-election splurge. Read more
Romania’s latest interest rate cut – to another all-time low – comes after a sharp slowdown in growth, but further easing will have to be weighed against the political outlook and the government’s likely parting of ways with the IMF.
The National Bank of Romania (BNR) cut its key rate 25 bps to 3 per cent on September 30, while reducing its minimum reserve requirements two percentage points to 10 per cent. The latter is expected to increase market liquidity by around 3.6bn leu ($1bn) from October 24, according to a note from BCR, Romania’s largest commercial bank. Read more
Negligible inflation and a desire to maintain exchange rate stability in spite of capital inflows were the key factors prompting Romania to cut interest rates to an all-time low, analysts said on Tuesday.
On August 4, the National Bank of Romania (BNR) reduced its key policy rate to 3.25 per cent from 3.50 per cent. Reuters quoted Governor Mugur Isarescu as telling reporters that more easing was possible. “There may be further (easing) space but, this time, we’d be forced to take decisions taking into account the external environment to a greater extent,” Isarescu was quoted as saying. Read more
An attempted murder in a bar brawl; a president under siege after the arrest of his brother and son-in-law on graft charges, having already survived two referendums on impeachment – Romanian politics may be messy but it is rarely boring.
For the economy, though, it is business as usual. And perhaps the fact that the law can reach even those closest to the country’s most powerful man is a positive development for a country once seen as a byword for corruption. Read more
Central and Eastern European local currency bonds lifted following a widely-anticipated move by the European Central Bank to cut key interest rates in a bid to anchor the eurozone’s tentative economic recovery.
The confirmation of cheaper money across the continent sent investors searching for riskier assets, further pushing down yields on Turkish, Hungarian and Polish bonds which have rallied over the last month. Read more
As the European Central Bank (ECB) teases investors with hints of monetary stimulus measures, expectations of a rate cut are already helping boost appetite for emerging market debt on the continent.
Yields on Hungarian forint bonds dropped yesterday following a heavily oversubscribed bond auction, and since the start of the month Polish and Romanian local currency bonds have also rallied. Read more
A Romanian investment fund originally set up by the government to compensate people who had their assets confiscated under communism will seek to list in London, in an ambitious move that could boost investor access to Romanian equities.
Fondul Proprietatea (“the property fund”) could complete a secondary listing on the London Stock Exchange by the end of the year, its institutional administrator Franklin Templeton said this month. Read more
Five per cent GDP growth is these days more associated with the fittest Asian and African emerging economies than the sluggish EU fringe, but Romania has sprung a surprise with its Q4 2013 figures, its best for five years.
A flash estimate from Bucharest’s National Institute of Statistics on February 14 suggests that the economy grew by 5.2 per cent year-on-year in the final quarter of last year. This takes its full-year rate to 3.5 per cent, among the fastest in Europe and appreciably above a recent IMF forecast of 2.8 per cent. Meanwhile inflation, once a serious concern, fell to an all-time low of 1.1 per cent in January. Read more
In recent weeks, much has been made of Romanians’ desire to leave their country and work abroad, partly due to the weakness of Romania’s own economy. On Wednesday, the country’s central bank made an ambitious move that may help that economy, the second poorest in the EU, by cutting rates to a record low and easing reserve requirements. Read more
Maybe it’s time to start preparing for a return wave of CEE migrants from western Europe, as Thursday’s flash GDP third quarter numbers show that most of the region’s economies are experiencing a sharp recovery – in contrast to stagnation in the eurozone. Read more
It was the biggest initial public offering in Romania’s history, and the latest of several big IPOs in eastern Europe. But will Friday’s part-privatisation of natural-gas utility Romgaz reinvigorate Romania’s stalled liberalisation programme? Read more
Hollywood, Bollywood, Nigeria’s Nollywood; France’s arthouse cinema scene, British romcoms, Italian and Russian film from the likes of Fellini and Tarkovsky; the Korean Wave. The cinema culture of south eastern Europe may be rather less celebrated outside the region than those of its more famous peers, but there is growing recognition both of a resurgent home-grown movie scene and the competitive advantages of SEE as a location for shoots. Read more
A lot of recent numbers indicate that central Europe’s economies have turned the corner and are starting to rebound after a slump late last year and in the first months of 2013.
More data buttressing that case came in over the last few days. In Poland, new car registrations in September were up by 16.5 per cent at 24,963 cars – that’s 13 per cent higher than in August. Read more