Bucharest stocks affected by political wind, brokers expect volatility to settle as soon as election result is known

The Bucharest stocks on Wednesday were still bearing the brunt of the political situation in the country, despite Monday's positive evolution, and brokers expect the volatility to last until the end of the presidential runoff."The local stock market has seen a significant correction phase in recent sessions following the results of the first presidential round. Most companies in the BET index, as well as the ETF that tracks this index, have wiped off almost all of their annual growth in recent weeks, standing at a level similar to that seen at the end of January. Basically, these companies have reported 9-month results in line with or even above analysts' expectations. This correction is the effect of both political uncertainty and of the market's expectation that the fiscal measures to be announced in 2025 could have a negative effect on listed companies. Currently, for investors who want to initiate positions on the local stock market, this is a favorable time, with quotes being below the target prices offered by analysts for both the current and next year. In some cases, the differences are even over 40%. Historically, December is a favorable month for the local stock market, which usually records an average increase of over 3%. With the conclusion of the presidential elections and the formation of a government by the end of the year, we could witness an upward trend from these lows," TradeVille deputy general manager Alexandru Dobre said.Prime Transaction stock market analyst Alin Brendea said that in the first part of Wednesday's session, the market was still reeling from the developments on the Romanian political scene."There was a rush in sales immediately after the opening of trades, resulting in a rapid plunge of the BET index by over 3%. Investors are concerned about the prospects of the Romanian economy, marked by growing imbalances and an uncertainty rarely seen in recent years about who and how will govern Romania in the coming period. Any questioning of the country's full EU membership significantly impacts investor market sentiment, as we have seen in recent days. The declines were also fueled by the statements of one of the candidates in the presidential runoff regarding the possibility of reviewing historical privatization deals, which suggests an arbitrary interposition of the state in the economy. After the initial declines, the market stabilized, taking to a slight recovery trend, probably driven by news about the imminent formation of a pro-European alliance that would have a comfortable majority in Parliament," said Alin Brendea.He specified that compared to the moment of the first presidential round, the market recorded a decrease of about 8% mid-session on December 4."The stock market seems to have continued its downward trend, which set in after the results of the first presidential round were announced. (...) I believe that the fairly high volatility is here to stay until Monday, when we will have the final results of the presidential election. If we look at the trading volumes, I don't think we can't talk about investors panicking, because the numbers are not very high. Market prices are given by the emotional reactions of investors and I think they are retail investors. It's a propitious moment for those who want to buy shares of companies they have in mind due to their good 9-month results. And fortunately, the Romanian market has issuers from various important categories - energy or banking - and the declines in this period can turn into buying opportunities for those who want to take positions on the respective issuers," said Ovidiu-Lucian Isac, Estinvest general manager.He also referred to the role played on the capital market by pensions Pillar II, as pension schemes can take new positions and complete their portfolios with issuers that are currently undervalued.Goldring broker Antonio Oroian emphasized that investors continue to close their positions and stay away until a clear outcome is seen."The problem is that even if there's a positive outcome of Sunday's election, the situation will continue to be complicated until a government is formed and beyond that, following the decisions that the authorities will have to take in order to narrow the deficits and counteract the other economic issues," Oroian said.The Bucharest Stock Exchange opened lower on Wednesday, and half an hour into trades, the BET main index, which tracks the 20 most liquid companies, fell 2.84%, while the BET-Plus index which tracks the 43 most liquid shares was also 2.82% down.