Celebrating Romania
2020-01-10 21:48

Ten years ago, Fondul Proprietatea (Fondul) was established to compensate Romanians whose properties were confiscated by the former communist government, and we were selected as its investment manager in September 2010. My colleague Grzegorz Konieczny, based in Bucharest, spearheaded the effort to list Fondul on the Bucharest Stock Exchange in 2011, and now Fondul is making its debut on the London Stock Exchange on April 29. In honor of the occasion, I've asked Greg to share his thoughts on investing in Romania today, and the exciting changes that have taken place there in the past few years.

十年前,Fondul Proprietatea(Fondul)成立了,以弥补资产被前共产主义政府没收的罗马尼亚人,而我们于2010年9月被选中作为其投资经理。我在布加勒斯特的同事Grzegorz Konieczny,负责带领Fondul于2011年在布加勒斯特证券交易所上市,如今Fondul于4月29日在伦敦证券交易所挂牌。趁这个时机,我让Greg来分享一下他对如今投资罗马尼亚的看法,谈谈那里过去几年令人兴奋的变化。

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Romania Macroeconomic Outlook


Romania's economic growth outpaced most of Europe last year, and we believe the Romanian economy can continue to grow at a similar or even higher pace than the 2.8% increase in gross domestic product (GDP) seen in 2014.1 Romania has access to European Union (EU) structural funds, which are one of the main EU instruments designed to sustain economic growth while reducing disparities between regions in the EU. We think Romania's growth going forward is largely dependent on an increase in EU funds absorption, which can provide a significant source of financing for current and future projects, as well as for government spending on much-needed infrastructure projects.


Various forecasts for Romania currently look bright. The World Bank estimates Romania's economy will grow on average by 3% per year in the period 2015 – 2017, driven by strong domestic demand).2 We think a new loan agreement with the International Monetary Fund (IMF) should also aid economic growth in Romania by increasing the country's financial stability, while at the same time providing oversight with regard to the implementation of structural reforms. Romania has undertaken a major fiscal adjustment, mainly through cutting expenditure and reducing some taxes. value-added-tax (VAT) for all food items, as well as non-alcoholic beverages, will be lowered from 24% to 9% starting on June 1, 2015, the prime minister announced in early April 2015. In addition, VAT for all other products will be lowered from 24% to 20% on January 1, 2016.

对罗马尼亚的各种预测目前看来乐观。据世界银行估计,在强劲的国内需求推动下,罗马尼亚经济将在2015年至 2017年期间平均每年增长3%[2]。我们认为,与国际货币基金组织(IMF)的新贷款协议也会增强国家的财政稳定,同时提供结构性改革实施方面的监督,从而有助于罗马尼亚的经济增长。罗马尼亚进行了重大的财政调整,主要通过削减支出和减少一些税收。总理在2015年4月初宣布,所有食品和非酒精饮料的增值税(VAT),将由24%下调至9%,从2015年6月1日起生效。此外,所有其他产品的增值税将从24%下调至20%,从2016年1月1日起生效。

Earlier this month, ratings agency Standard & Poor's confirmed Romania's ratings for long- and short-term foreign debt to BBB-/A-3 (the lowest investment-grade rating), with a stable perspective.3 S&P also estimates that Romania's economy could grow on average by nearly 3% per year in the period 2015–2018, driven by the increase of internal consumption. While Romania's public debt-to-GDP has increased significantly since 2006-2007, it is still at a relatively moderate level (around 40%).4 Domestic consumption has picked up significantly and we have seen strong export growth in Romania. We believe consumption growth looks strong in 2015, but investments are still lagging behind. However, like economic growth in general, investments could be partially boosted by a better absorption of EU funds. Additionally, Romania registered a current account surplus of €285 million in the first two months of 2015, compared to a current account deficit of  €201 million in the same period of 2014.5 We also view the Romanian government's continued fight against corruption, which has intensified in recent months, as a positive factor for investors.

本月初,评级机构标准普尔确认罗马尼亚的长期和短期外币债券评级为BBB-/ A-3(最低的投资级评级),具有稳定的展望[3]。标普还估计,在内部消费增长的带动下,罗马尼亚的经济可能在2015年至2018年期间以平均每年近3%的速度增长。虽然罗马尼亚的公共债务占国内生产总值的比例自2006年和2007年来显著增加了,但仍然处于相对温和的水平(40%左右)[4]。国内消费回升显著,出口增长强劲。我们认为,2015年的消费增长看似强劲,但投资仍然落后。然而,像经济增长一样,更好地吸收欧盟资金可以推动投资。此外,罗马尼亚在2015年前两个月取得了2.85亿欧元的经常账户盈余,去年同期为2.01亿欧元[5]。我们也认为,罗马尼亚政府的持续反腐败斗争在最近几个月愈演愈烈,对投资者来说是个积极因素。

Progress on Privatizations


We are encouraged by Romania's privatization efforts, including the listing of several key State-Owned Enterprises (SOEs) on the Bucharest Stock Exchange (BVB) in the energy sector recently. Some of these companies have also been listed through global depository receipts (GDRs) on the London Stock Exchange. There is also an anticipated pipeline of initial public offerings (IPOs) ahead, including a large hydro power producer in Romania. Romania is currently considered a frontier market by index provider MSCI, but officials in Romania seem determined to implement the changes required to be upgraded to emerging market status; we are encouraged by the Romanian government's efforts toward further improving its capital markets. As such, there are several ongoing efforts led by the government, the local stock exchange, the market regulator and several key stakeholders in the Romanian capital market to accelerate capital market development. One particular initiative in this regard aims to identify and remove eight barriers that prevent the development of capital markets. Coupled with another initiative launched by the market regulator, the Financial Supervisory Authority, these programs aim to facilitate investor access to Romania.


Romania has implemented a highly ambitious corporate governance code for SOEs, which has generated positive outcomes for various companies, including improved financial performance, operational efficiency and competitiveness, higher transparency, and accountability of general managers and boards. In our view, efforts to strengthen corporate governance need to be continued, given that it plays a major role in enhancing SOE performance and reassuring potential investors that SOEs are on an irreversible restructuring path. SOEs are a significant part of the Romanian economy, and we believe the process of improving the efficiency and profitability of the SOEs must continue. We see the implementation of corporate governance standards as a step in the right direction, but there is still a lot to be done in terms of much-needed improvements for independent boards, professional managers and listings.


Foreign Investments and Capital Markets


Foreign direct investment is on the rise in Romania, increasing by 45% year-on-year to €409 million in the first two months of 2015, according to Romania's Central Bank (BNR).6 In our view, structural reforms, including a push for more fiscal predictability, coupled with a new IMF loan agreement, should likely boost investor confidence in Romania. In addition, we believe the efforts undertaken to facilitate investor access to the local capital market, which has been quite difficult in the past, are positive steps towards attracting more foreign investments in Romania. We think development of the capital market and higher liquidity of the BVB would be beneficial for attracting more foreign investors. We also see predictability in fiscal policy as very important to stimulate investments; enacting new legislation or changing existing legislation through emergency government ordinances should be avoided. We believe all changes should go through the Parliament and public consultation should be a key component of the legislative process.


Investment Opportunities—and Risks


Romanian equities generally appear undervalued to us when compared with other countries in the region. For example, as of March 2015, the price-earnings (P/E) ratio for the BET Index Romania was 9.9, while it was 10.1 for the XU100 Index in Turkey,  14.4 for the WIG Index in Poland, and 13.6 for the BUX Index in Hungary.7 And, we think dividend yields on Romanian equities have also been attractive. We continue to see good potential opportunities in the energy and infrastructure sectors in Romania. Key drivers should be further privatizations (including IPOs of SOEs) that could result in efficiency improvements, better corporate governance, and improved absorption of EU funds allocated to Romania. In addition, we see further growth in domestic consumption amid general economic improvement that should also speed up a recovery in the banking sector.


Risks of investing in Romania include political volatility, lack of a new agreement with IMF, delays in implementing structural reforms and low absorption of EU funds. Lack of predictability also remains a key issue, discouraging many investors. An unannounced tax on special constructions, which greatly reduced the profit margin of energy sector companies, was introduced shortly after the IPO of one of these companies. In addition, the regulated rate of return of electricity distributors was also reduced only months after the IPO of the largest distributor and supplier of electricity in Romania.


Romania and the Euro


Romania's goal of adopting the euro by 2019 may be achievable in our view, provided that the economic growth of the country continues in a steady pace and it can continue to improve in key areas. In order to assess a country's preparedness to adopt the euro, several transition indicators may be used, according to the European Bank for Reconstruction and Development (EBRD). These include large scale privatization, small scale privatization, governance and enterprise restructuring, price liberalization, trade and forex system and competition policy. Compared with the situation of other countries at the time of euro adoption, such as Slovakia (2009), Estonia (2011), Latvia (2014) and Lithuania (2015), we think Romania still needs to make significant improvements, particularly in terms of governance and enterprise restructuring, as well as competition policy. We believe progress in these areas may unlock Romania's growth potential and ensure better preparedness for the goal of euro adoption by 2019.


QE and Romania


The European Central Bank's (ECB) quantitative easing (QE) program highlights the central bank's desire to inject liquidity into the markets, and this could reflect positively on the Romanian capital market, in our view. In addition, the QE program offers the BNR more maneuvering space with regards to monetary easing; Romania's central bank cut its key policy rate to a record low of 2% in March. At the same time, we think the downward pressure exerted as a result of the ECB's QE program on interest rates for deposits and state bonds could further stimulate foreign investments and consumption.

 欧洲央行的量化宽松计划凸显了央行为市场注入资金的意愿,我们认为,这可能对罗马尼亚资本市场产生积极的影响。 此外,量化宽松政策为罗马尼亚央行提供了更多货币宽松的回旋空间;罗马尼亚央行3月把关键政策利率调低至2%的历史低点。与此同时,欧洲央行的量化宽松政策对存款和政府债券利率所造成的下行压力,可能会进一步刺激外国投资和消费。

Comments, opinions and analyses are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Because market and economic conditions are subject to rapid change, comments, opinions and analyses are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment or strategy.


Important Legal Information


This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. The companies and case studies shown herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton Investments.

本文只供一般性参考,不应被视为个人投资建议,或推荐投资者购买、出售、持有任何证券及采纳任何投资策略的建议或招揽,不构成法律或税务咨询。本文所列的公司和案例研究仅供说明;富兰克林邓普顿(Franklin Templeton)所建议的任何投资组合目前尚未确认是否存在投入。

The opinions are intended solely to provide insight into how securities are analyzed. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio. This is not a complete analysis of every material fact regarding any industry, security or investment and should not be viewed as an investment recommendation. This is intended to provide insight into the portfolio selection and research process. Factual statements are taken from sources considered reliable but have not been independently verified for completeness or accuracy. These opinions may not be relied upon as investment advice or as an offer for any particular security. Past performance does not guarantee future results.


The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market.


Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments opinions and analyses in the material is at the sole discretion of the user. Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FT affiliates and/or their distributors as local laws and regulation permits. Please consult your own professional adviser or Franklin Templeton institutional contact for further information on availability of products and services in your jurisdiction.

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CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

Copyright © [2019]  。富兰克林邓普顿投资。版权所有。

What Are the Risks?


All investments involve risks, including the possible loss of principal. Investments in foreign securities involve special risks including currency fluctuations, economic instability and political developments. Investments in emerging markets, of which frontier markets are a subset, involve heightened risks related to the same factors, in addition to those associated with these markets' smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Because these frameworks are typically even less developed in frontier markets, as well as various factors including the increased potential for extreme price volatility, illiquidity, trade barriers and exchange controls, the risks associated with emerging markets are magnified in frontier markets. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions.


To get insights from Franklin Templeton delivered to your inbox, subscribe to the Investment Adventures in Emerging Markets blog.

有意从富兰克林邓普顿 (Franklin Templeton) 的邮件中了解更多信息,请订阅 “新兴市场的投资冒险” (Investment Adventures in Emerging Markets) 博客。

For timely investing tidbits, follow us on Twitter @FTI_Emerging and on LinkedIn.

有意及时投资的话,请在推特上关注 @FTI_emerging和LinkedIn。

The technology industry can be significantly affected by obsolescence of existing technology, short product cycles, falling prices and profits, competition from new market entrants as well as general economic conditions. The technology sector has historically been volatile due to the rapid pace of product change and development within the sector.


1. Source: NSI Romania www.insse.ro, April 2015.

[1] 来源:罗马尼亚国家统计局www.insse.ro, 2015年4月。

2. Source: World Bank. There is no assurance that any forecast will be realized.

[2] 来源:世界银行。没有保证任何预测会实现。

3. Source: Standard & Poor’s, February 2015. See www.franklintempletondatasources.com for additional data provider information.

[3] 来源:标准普尔,2015年2月。参见www.franklintempletondatasources.com了解数据提供商的额外信息。

4. Source: Eurostat, 2014.

[4] 来源:欧盟统计局,2014年。

5. Source: Romanian National Institute for Statistics (INS).

[5] 来源:罗马尼亚国家统计局。

6. Source: Central Bank of Romania.

[6] 来源:罗马尼亚中央银行

7. Source: Bloomberg L.P. As of March 31, 2015. The P/E ratio is a valuation ratio of a company's current share price compared to its per-share earnings. Indexes are unmanaged and one cannot directly invest in an index.

[7] 来源:彭博社。截至2015年3月31日。市盈率是公司目前股价对每股盈利的比例。指数是不受管理的,投资者不能直接投资于指数。

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