How we invest during crisis times

02/04/2020 / Comments Off on How we invest during crisis times

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The Romanian Investor Relations Association (ARIR) invited top specialists from the Romanian financial market to discuss the perspectives of the crisis recovery and the lessons learned. New conclusions of the ARIR’s online event “Market Sentiment – March” – with the representatives of the National Bank of Romania, Bucharest Stock Exchange, Franklin Templeton, Bucharest Airports, OTP Asset Management and Rivel Research – stock markets declines are steeper than in 2008, however companies are stronger, thus the professionals urge for long term investments. The entire event is available HERE.

Adrian Tănase, CEO, Bucharest Stock Exchange
The markets nowadays are behaving differently, the corrections are much more abrupt than in 2008 and probably it will be another prove that on the long term the equities’ market recovers. The message for the retail investors is that they should have a long-term perspective, a diversification in the portfolio and the discipline to invest also during periods like the current one. Our CCP project is going forward and we want to implement it according with the initial timeline. Nowadays, the need to have a derivative market is maybe even higher, as it would have helped in this period to have some hedge products in the market. There could also be a window to implement some other solutions in the market, online account opening, proxy voting and other tools for the investors.
Johan Meyer, CEO, Franklin Templeton
The market impact is being felt around the globe, but the situation is very different compared to what it was 10 years ago. Companies are in very strong positions, with good cash flows and strong balance sheets. The pain is most acutely felt in the energy sector. Also, lot of the companies that are suffering around this crisis have a rather collateral damage than being directly impacted.
What is extremely important in any well – functioning economy is the liquidity and the strength of the banking system and clearly this is much, much better than it was during previous crisis. Romania steps out very well compared to other markets around the globe. There is tremendous value that is appearing on the stock exchange. There are certainly opportunities to buy companies at valuations that we have not seen in probably a decade. The most important factor in the planned IPOs going forward is that there is complete shareholder support to drive this process forward and companies like Bucharest Airports and Hidroelectrica will determine the success and the progress of the Romanian capital markets.

Dragoș Manolescu, Deputy CEO, OTP Asset Management
We have now the door open to buy at discounts even if the prices will go even lower. In the long-term, for equity investors a door was open to buy solid companies at discount and this is valid both for Romania and globally. In the country, the presence of the pension funds will mean smaller decreases in the stock market compared to other markets.
How this crisis will develop depends very much on the central banks and on the governments, as they need to work together to restore confidence in the markets. Globally, in the last months we noticed the biggest outflows ever from the bond funds and supporting measures coming from the central banks, as they were in the last month the only buyers of government bonds. The central banks have done their homework and the governments have also learned from 2008.
It is very important for the economy to finance at a cheaper rate and the sectors that are affected to be helped by the Governments, but also reinvent in order to survive.

Vlad Stoicescu, Strategy and European Compliance Manager, Bucharest Airports National Company
We are looking to consolidate the company with our investment plan before going through an IPO. The current events might change our perspective but currently we are working with a scenario where the market picks up in the third quarter and we will adapt as we go. The crisis found us quite liquid and our first concern was to ensure continuity. The main shareholders have sent a very clear message for no delay regarding our investment plan, so we are still ongoing with doubling the capacity for the Bucharest Airports. We expect that investors will crowd the borders when this situation will end.