The Bucharest Stock Exchange on Monday became an emerging market, a move hailed by Prime Minister Ludovic Orban who said it would allow top-tier companies to expand to regional and global markets.
The development also focuses investor attention on other companies and Mr. Orban said he hoped it would encourage Romanians to invest in stocks and shares.
„It is … a sign of confidence for all companies who want to invest in the stock market,” Mr. Orban said at a reception at the British embassy to mark the event attended by investors and members of the business community.
British Ambassador Andrew Noble said the reclassification was „a clear example of the fact that the Romanian economy can overcome obstacles in its way and can get very good results when legislation and rules are favorable.”
Under the new rating, the top two companies on Romanian stock exchange, the BVB, will be included in the FTSE Global Equity Index Series (GEIS).
The upgrade is considered a key moment for Romania’s capital market because it gives it access to emerging markets funds.
The Romanian companies that are on the FTSE Global All Cap Index, and three other indexes, Banca Transilvania and energy company Nuclearelectrica. Romania’s share in these indexes will be under 0.4%.
Mr. Orban said his business-friendly government hoped it would merely be a first step in the capital market.
„The market economy, capitalism must be based on a strong capital market, ” Mr. Orban said.
„Romania needed this step forward to obtain the status of secondary emerging market as a mark of confidence, firstly for stock market traders, investors, regardless of whether they are investment funds or pension funds or other investors.”
„A company reaches the premier league once it is listed on the stock exchange. Any company that is on the stock exchange is much more credible, and is able to get more financing and also has the capacity of expanding to regional and global markets.”
He added that his Liberal government would help prepare public companies for the stock exchange and encourage private companies to take the necessary steps, providing financial and fiscal instruments
He said another goal would be to raise awareness among ordinary people about the stock exchange and encourage more people to invest in stocks and shares.
„Of course it is more risky to invest in the stock exchange, but it is also more exciting and gains can be much bigger,” he said.
„The step which has been taken must be followed by other steps to quickly develop into a constant capitalization of the stock market,” he said. There should be „more companies on the stock exchange, and a growth in its attractiveness of the Bucharest stock exchange for investors and increase in traders,” he said.
„The development of the stock exchange is the surest sign of the development of Romania’s economy,” he said.
Ambassador Noble said „I am sure British investors will look to Romania. The UK is home to many European investment funds, and the opportunities in Romania are extraordinary.”
FTSE Russell which is a leading stock indexes providers decided to reclassify Romania from frontier to secondary emerging market a year ago. It previously had frontier market status.
S&P Dow Jones has Romania on its watchlist for a similar promotion.
The Bucharest Stock Exchange opened in 1995.