Small stock market investors becoming extinct

BVB data shows that the number of accounts through which Romanian individuals made at least one transaction last month dropped to some 7,000, the lowest level since February 2005, when the stock market began to centralize data on investors.

In previous years, sales accounts constantly exceeded the 100,000 threshold, as these included many transactions made by Romanians who received minor amounts of shares in the early 1990s, as part of the Mass Privatization Program. Stock given to the population was named coupons, and those who received them are known as “coupon owners.” Some 10 million Romanians were granted such coupons.

This year, however, due to the global financial crisis, the number of sales accounts has declined constantly, dropping in November below 10,000 accounts, for the first time in years.

“The number of coupon owners has dropped. More precisely, deals made by small investors severely declined, as there are many stockholders who only have hundreds of shares they did not receive in the 1990s. Coupon owners are disappearing from the market,” according to STK Financial asset management company President, Nicolae Pascu.

Many coupon owners chose shares in the five BVB-listed financial investment companies (SIF). They still own some 20 percent of the SIFs’ stock, but many of these are not trading their shares on the capital market. “A 10 percent package will probably never be traded,” Pascu said.

Many of the coupon owners sold their SIF participations last year, when share prices of the financial investment companies reached historic highs. “There are not so many coupon owners left. They still own some 25 percent of SIF Oltenia shares, compared to 45 percent last year. I think that a 5-6 percent package will never be sold,” said SIF Oltenia Administrator, Teodor Buzatu.

Brokers say that fewer investors are currently trading stock on BVB because share prices plunged this year. “Coupon owners are not the kind of investors who follow the market, but when, for example, they see that their SIF Oltenia coupon is worth only RON 700 (€182), while a relative sold theirs for RON 4,000 (€1,040) a while ago, he will no longer consider selling,” said the General Manager of Broker Cluj company, Adrian Ceuca. “This time last year, we had some 500 [sale] orders every day from coupon owners. If we have 100 at this time, we consider this good,” he added.

November was the first good month on BVB, after stock prices dropped sharply this year, leading to historic losses in October. Last month, foreign investors were net buyers on the stock market, but their investments were the lowest since August 2005, at €1.5 million.

‘Coupon owners are not the kind of investors who follow the market, but when, for example, they see that their SIF Oltenia coupon is worth only RON 700 (€182), while a relative sold theirs for RON 4,000 (€1,040) a while ago, he will no longer consider selling' Adrian Ceuca General Manager, Broker Cluj