Why should foreigners return to BVB when they have higher gains on developed markets?

The S&P 500 index, which follows the evolution of the largest 500 companies on U.S. markets, climbed 16.5 percent since the beginning of this year, while on the local market, the BET index, of the ten most liquid listed companies, with the exception of SIFs, surged 51.6 percent. SIFs, on the other hand, had an even sharper increase, gaining nearly 100 percent on average.

“I believe that the reluctance of foreign investment funds to invest in Romania is more related to the liquidity shortage on a larger number of issuers, and to macroeconomic risks related to the evolution of GDP [gross domestic product], the devaluation of the currency, inflation, etc. And considering that the emerging markets in the region, including the Romanian one, are expected to bounce back after the rebound of developed markets, it is only natural for foreign funds to be holding off in this period,” said Oleg Galbur, Head of the Analysis Department of Raiffeisen Capital&Investment. He added that, in the long-run, emerging markets should generate higher returns than developed markets.