The Bucharest Stock Exchange registered in 2021 one of the best years in its history, and we refer here especially to the 26 years of activity carried out after 1989. We have been following closely the important results achieved by BSE last year and have considered it appropriate to offer our readers, many of them entrepreneurs in the gambling industry, an interview with the President of the BSE, Mr. Radu Hanga, to reveal more about the recent results of the institution he leads, to detail the important role that the Stock Exchange has in the economy in attracting sources of financing for companies, or the reason why someone would list their company on the Stock Exchange.
We have seen an increase in the listings on the Bucharest Stock Exchange of gambling companies. Why do you think this is happening? And why now?
The Bucharest Stock Exchange is a financing platform accessible to any company, from various sectors of activity. In fact, the diversification of the economic sectors on the stock exchange is our goal, because in this way we manage to directly finance the Romanian economy, through each issue of shares or bonds. Over time, the stock market has been accessed even by players in the field of gambling, such as Superbet, which listed in 2017 a bond issue of almost 10 million lei, with a maturity in 2020. There are, of course, other scholarship financing approaches in preparation for companies in this sector. This brings us joy and we hope that more and more entrepreneurs will choose the stock exchange as a partner in business development.
In the last period of time, the Bucharest Stock Exchange registered increases both in terms of trading volume and the number of companies and investors present on BSE. What do you think is the reason for these recent BSE results? If you can give us some relevant figures.
We are in a very good moment for the capital market, which reported in 2021 multiple records on different levels, and we can say that the Romanian stock market had one of the best years in history. The results of 2021 reconfirm that our development projects are going in the right direction and that the capital market is fulfilling its essential mission as a financing platform for the Romanian economy. The cumulative value of transactions with all types of financial instruments on the Regulated Market of the Bucharest Stock Exchange exceeded for the first time, at the end of last year, the threshold of 20 billion RON, the equivalent of over 4 billion euros. The average daily liquidity for all types of financial instruments registered a new maximum, of 79.4 million RON. The BET and BET-TR indices recorded new historical highs in 2021 – over 13,000 points in the case of BET and over 23,000 points in the case of BET-TR, after increases of 33% and 40% respectively. Multiple records were also reported on the AeRO market: the capitalization of listed companies increases by 136%, the total trading value by 253%, and the average daily value of transactions by 249%. The number of investors on the stock exchange continued to grow: over 74,000 direct investors, 9-month FCI data show, and 540,000 investment fund investors, according to AAF’s 11-month data.
The success of the 2021 results lies in a combination of factors and measures started in previous years and continued throughout 2021. We have put in place the necessary mechanisms that have created the right environment for the optimal functioning of the market, respectively the improvement of liquidity. Together with all those who are part of the stock market community, we have responded to market demands, we have initiated and developed new projects and partnerships, and the record results of 2021 show that the efforts of BSE and our partners have paid off.
What would be the reason why I would list my company on the Stock Exchange? Many companies are looking for sources of funding and probably some of them are making mistakes and taking bad bank loans or looking for money from other sources. They don’t know that, for example, they can list their company on the stock exchange and grow their business harmoniously and healthily if they take this step towards BSE. What do we tell them?
In 2021, the Bucharest Stock Exchange consolidated its fundamental role as a financing platform for the Romanian economy: 23 companies were listed on the stock exchange in 2021 and attracted financing of 234 million lei, and the 45 bond issues listed on BSE last year exceeded 1.8 billion euros.
The explanations for this jump are many. First of all, BSE projects in the direction of increasing the visibility among Romanian entrepreneurs started years ago, the best example being the program dedicated to them, Made in Romania, through which we promote the most promising businesses with Romanian capital. All this time BSE has become more and more visible and the local capital market has become much better understood by local entrepreneurs. They are increasingly discovering the opportunities that the capital market offers, and each success story of a new listing on the stock exchange becomes a motivating example for other and other entrepreneurs.
I also add here the visibility that the status of listed company implies and the image benefits obtained. Listing on the stock exchange is an important step for a company, this decision turns it into a public, open company. It is also about changing the approach at the management level, which also involves changes in the business structure to apply the requirements of the listed company, which are not difficult, being primarily about transparency and fairness in the relationship with investors.
We also cannot ignore the macroeconomic context generated by the pandemic. The massive capital infusions of central banks in 2020 have generated a spectacular return of stock markets, and this has happened in a local context in which the economies of the population have already been on a strong upward trend for several years. Only in Romania, the value of bank deposits has increased significantly, this capital surplus becoming an important source of financing for companies with development plans.
How hard is it to list on the stock exchange? I ask you this considering that other companies would also like to attract investment from the capital market, but they may find it too complicated, either there are too many rules to follow, or they are simply not properly informed and may miss an opportunity.
The transparency involved in the status of listed company is one of those elements that must be perceived in terms of benefits, and in the long run, transparency only brings benefits, and not only in the relationship with investors, but also in the relationship with customers, suppliers and other partners. Moreover, the transparency of the activity and the results towards investors and the achievement of quality reports are elements that influence the evolution of the share price. This is the essence of a public company, transparency.
Another barrier encountered among entrepreneurs when thinking about the stock market is not to lose control over the decisions they make for business. It’s a myth, the entrepreneur keeps control of their business, something that investors also want. Usually investors invest their money for future income, they put their money to work for them, not with the intention of interfering so much in the decisions that are made in a company.
Listing requirements on the AeRO market are more affordable than those on the Regulated Market. The best examples in this regard are the need for an audited financial history for the Regulated Market, but the mandatory reporting in IFRS format, requirements that do not exist for the AeRO market. Also, the companies on the AeRO market are obliged to report the annual and half-yearly results, while on the Regulated Market the quarterly reports are also mandatory.
In terms of quantitative criteria, for listing on the AeRO market, a company must be worth at least 250,000 euros in advance capitalization and sell at least 10% of the shares (10% free-float) or have 30 shareholders. To be listed on the Regulated Market, a company must be worth at least 1 million euros of early capitalization and cede at least 25% of the shares (25% free-float).
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On November 20, the Bucharest Stock Exchange celebrated its 26th anniversary. Can you take a look back at the most important moments in the history of BSE and the most important moments of 2022 for the institution you lead?
As you say, we recently celebrated, on November 20, 26 years of the modern stock market, 26 years since the reopening of the Bucharest Stock Exchange. However, the history of the Romanian Stock Exchange has much deeper roots, correlated with the history of Romania. In 1881, shortly after the Declaration of Independence of Romania, the first Romanian stock exchange was established by Royal Decree, and on December 1, 1882 was held the first meeting of the Bucharest Stock Exchange. The history of the stock market has not been smooth or continuous, but in tune with the historical events of the last century. However, we are the continuators of this long history of the Romanian capital market and every company and investor that comes to the market carries on this rich history and writes it in their turn. Moreover, coincidentally or not, but certainly symbolically, the current headquarters of the Bucharest Stock Exchange is on Carol I Boulevard, the signatory of the Royal Decree establishing the Stock Exchange.
Today we are in a significant moment both in terms of performance, as well as from a historical point of view because December 1, 2022 marks 140 years since the official opening of the stock exchange in Romania, an institution that played a fundamental role in the development of the country. The results of 2021 reconfirm that our development projects are going in the right direction and that the capital market is fulfilling its essential mission as a financing platform for the Romanian economy.
Finally, what would be your message to the companies in the Romanian gambling industry regarding the future exploration of the possibility of a collaboration with the Bucharest Stock Exchange?
The Bucharest Stock Exchange offers financing mechanisms for entrepreneurs from all fields of activity, from IT, to agriculture, from real estate, gambling or courier – we want to be a more accurate picture of the Romanian economy.
As a message for the entrepreneurs who are now reading this interview, I invite them to include the Bucharest Stock Exchange in their future plans, both as a financing solution and as a platform through which they can increase the visibility and notoriety of their business.
The recent evolution of the stock market can only make us happy and make us confident that the capital market will become the favorite place for entrepreneurs to attract financing and for Romanians to invest. We want 2022 to be even better for the entire capital market and all those who are part of it: brokers, investors, companies.