Info fonds : MEI Roemeneï en Bulgarije Fonds

Le commentaire des gérants du MEI RBF (22/07/08) sur la situation actuelle :

Global credit crunch, heavily depreciating Dollar and record prices for oil and other commodities : 2008 has been an extra-ordinary year for investors so far. The Dutch AEX index reached its lowest level since three years and also the US Dow Jones Index closed below the level of 11,000 points for the first time since July 2006. Investors are particularly concerned about the consequences of the credit crunch and a slowdown of the world economy. MEI-Roemenie en Bulgarije Fonds (RBF) was also hit by the negative sentiment on stock exchanges. While the fund showed very strong yields in the first two years after its introduction (2006 : 28,8% and 2007 : 52,8%), RBF lost considerable ground in 2008. What are the primary reasons for this high volatility?

Liquidity is causing high volatility
The stock exchanges in both Romania and Bulgaria are still in their early stages of development. Daily liquidity is low, which can impact the prices heavily. Large buy and sell orders distort the balance between demand and supply. When sentiment is good, large buy orders cause strong increases of share prices, that only partly anticipate future fundamental development of a company. Additionally, when investors are massively selling their shares the rule applies too. This causes steep declines of the share prices.

Romania and Bulgaria
Negative sentiment on stock exchanges in USA and Western Europe increasingly affects the exchanges in Romania and Bulgaria. Driven by a range of negative news investors become more risk averse. Therefore a number of large (foreign) investors decided to sell their positions in both countries in an aggressive way. Given the low liquidity of both exchanges, this selling pressure causes steep declines of share prices. The share prices are not longer (fully) driven by fundamental factors, but primarily by current turmoil on the markets. Currently the Romanian BET Index moves around the level of July 2005, which is 25% below the level at the introduction of RBF.

Prospects
The fund management is of the opinion that the fundamentals for both countries remain strong. Economic growth for both companies during Q1 surprised on the positive side, with 8.2% for Romania and 8% for Bulgaria. Both countries benefit from the strong growth in the construction sector and are still lagging the average EU level of GDP per capita.

The valuations of the companies are very attractive, with price-earnings ratios between 5 and 10 and a strong growth of profitability. The financial institutions in both countries show a very strong growth, benefiting from the current low bank penetration. Therefore investors should look beyond the current turmoil.