This guide is for intrepid investors who are wondering how to invest in Romania and the Bucharest Stock Exchange. Curious about investing in other frontier markets? Check out a list of our guides here.
Romania is one of the main countries in Eastern Europe and a mainstay for frontier market investors interested in the region. It has come a long way since exiting communism in 1989. With a GDP per capita hovering around $20,000 USD, it is one of the richer frontier market economies that we monitor, but still developing when compared to most of the rest of Europe.
Though it joined the European Union in 2007, Romania continues to use it’s own currency, the leu (RON). It’s biggest trade partners are all in the European Union led by Germany, Italy, France, and Hungary. It’s finance ministry has forecast a robust 4.8% GDP growth rate for 2016, one of the highest in Europe.
Romania has a fairly well diversified economy with an Economic Complexity Ranking of 0.72, good for 38th in the world. Here is a visualization of their main exports:
- Automobile Dacia: Romania’s national car company, owned by Renault
- OMV Petrom: the largest oil and gas company in Romania, part of Austrian group OMV
- Rompetrol Group (aka KMG International): The other large oil and gas company in Romania
- Kaufland Romania: largest retailer in Romania, a German hypermarket chain
- Banca Comercială Română (BCR): the largest bank in Romania
Is It Safe To Invest In Romania?
According to our Investment Safety Rankings, Romania is ranked #44 in the world and is relatively safe to invest in. Romania’s Corruption Perception Index ranking lagged a bit, a possible vestige of communist rule. But on the other hand, it’s Ease of Doing Business ranking was in the mid forties, and the Fragile States Index had it ranked as a relatively peaceful area.
Can Foreigners Invest In Romania?
Yes, Romania is very friendly to foreign investors. It’s membership in the EU has helped to push the local laws to be more EU-compatible, and there are no laws restricting foreign investors from investing directly or through a portfolio investment. They have a lot of material available for prospective investors, mostly to court FDI into the country.
For equity investors, the Bucharest Stock Exchange is the main avenue for investment.
Bucharest Stock Exchange (BVB) Snapshot:
In operation since: 1882, but re-opened in 1995 post Communist rule
Location: Bucharest, Romania
Market hours: 09:30 to 18:10
Currency: Leu (RON)
Market Capitalization (as of Sep 2016): 139 billion RON (approx. $35 billion USD)
Local Listed companies (as of Sep 2016): 85 companies listed on the main Regulated Market, another 279 early-stage companies listed on the AeRO Market
Exchange Fees: 10 basis points from the Bucharest Stock Exchange/FSA, plus 0.85 bps for clearing and settlement. This is in addition to brokerage fees.
Taxes: Capital gains are taxed at 16%, dividends have a withholding tax of 5%
Main Index: BET (Bucharest Exchange Trading) Index, the 10 most liquid shares listed on the BVB
The Bucharest Stock Exchange (BVB) offers both equities and bonds. Equities are split into two main markets, the Regulated Market (RM), and the AeRO market.
The Regulated Market is the main market for large companies (minimum market cap of 1 million Euros), and is probably where most investors will be looking to invest.
The AeRO is for start-ups or SMEs looking for financing, and is only for listing early-stage companies that do not meet the requirements for the Regulated Market.
There is a minor third market, the ATS International, which are parallel listings for large foreign companies, almost all of which are German. There are currently 14 companies listed on this part of the exchange.
Top Companies on the Bucharest Stock Exchange:
Here are the top 10 traded stocks which make up the BET Index (as of 1H 2016):
|Company||Symbol||Industry||Mcap (RON mn)||Weight (%)|
|Fondul Proprietatea||FP||Closed-End Funds||5,095||20.25|
|BRD Groupe Soc. Gen.||BRD||Banks||2,732||10.86|
|Bursa de Valori Bucuresti||BVB||Financial Services||183||0.73|
How to Invest on the Bucharest Stock Exchange:
To trade on the Bucharest Stock Exchange, you need to trade through a Romanian brokerage firm which is a member of the BSE Association. Opening processes are straight forward so we will not go into too much detail.
You can find a full list of brokerage firms along with their ranking in terms of trading volumes on the Bucharest Stock Exchange website, here.