Stock Exchange: the sharpest drop since March 2007

BVB lost €1 billion, while losses on the Rasdaq amounted to €150 million. Market capitalisation lost €10.64 mln compared to July 2007, when the subprime crisis began in the US. BVB’s general index was subject to its greatest loss in the past 10 months, of 4.77 percent, although Financial Investment Company (SIF) shares suffered most, down 5.2 percent.

Romanian brokers believe that a BVB comeback depends largely on foreign markets, especially as Romania’s macroeconomy is not sound.

German business daily Handelsblatt, quoted by news agency Rador, indicated that Romania runs the greatest short-term financial risk in Eastern Europe. The newspaper went on to say that all of Eastern Europe is in financial crisis.

“Major active banks in Eastern Europe directed their strategies in terms of significant economic growth. However, if the market begins to show the least signs of weakness, this could lead to a slowing in yields,” says Dick Schiereck, professor at the European Business School (EBS).

Nevertheless, banks involved in this area are proving to be more optimistic, although they recognize that perspectives for growth will be less significant.

Erich Hampel, Chairman of the Managing Board of Bank Austria-Creditanstalt, is cautious, mentioning “cost risks” and a possible “credit dearth.”

Romanian analysts are used to such foreign predictions, which they believe do not take into consideration many criteria and lack a sound understanding of the Romanian reality. “The year cannot be worse than 2007,” according to a statement for Business Standard by Lucian Anghel, Chief Economist of Banca Comerciala Romana (BCR), owned by Erste.