Thus, while shares dropped by up to 2 percent at the beginning of the day, after 2 p.m. these bounced back to an upward trend. The index of the financial investment companies (SIF) rose by more than three percent by the time the session closed.
However, analysts said that the appreciation of shares in the past two months, combined with reports of declining profits by listed companies, could eventually lead to a rise in the price of shares above their real value. “The risk I see at this moment is for shares to go from undervaluation to overvaluation. If most companies continue to register declining profits this year, and the prices of shares remain at their current level or even increase, the price-to-earnings ratios will rise. Consequently, investors could ask themselves if a share has become too expensive compared to the company’s performance,” said Mihai Caruntu, Head of the Equities Market Analysis Department of the Banca Comerciala Romana (BCR) lender.
“Theoretically, the cut in the key rate by BNR is a positive signal for companies, because it could ease their access to bank financing. However, the real effects in the quotations of shares are visible in three-six months, not from one day to the next,” Caruntu added.
