An  Introduction In 2006 the Romanian economy completed a seventh year of impressive economic growth fueled by privatizations of previously nationalized business and the implementation of lower income and profit taxes.  With no doubt in the world’s eyes, Romania entered the European Union with tremendous momentum in 2007.  The average real economic growth rate for the period 2000-2006 was an impressive approx 5.5%.  However, challenges remain looking forward with a widening C/A deficit and the loss of 2 million Romanians driven out to seek employment by an economy that did not create enough jobs.  There is also increased speculation of higher inflation and volatility in Romania’s stock exchanges which in year terms are in their infancy of existence. The first Romanian stock exchange was originally established in 1882, but it was closed in 1948 following the nationalization of private property by the communist party.  A few years after the fall of communistic rule, the Bucharest Stock Exchange (BSE) was formally opened on April 21, 1995 and effectively started trading on November 20, 1995 with just six companies and only one trading session per week.  Today, coupled with the benefit of accession into European Union Membership on January 1st, 2007, realizing breathtaking returns on market performance and relishing in new technology and foreign investment, the Romanian financial markets seem be building onto a new, shining era of modern expansion.  Total market capitalization is currently over 45 billion US dollars.  Market trades are executed in RON, the Romanian currency and many Blue Chip stocks may still be purchased for a valuation of less then $1 US dollar per share!  One Romanian RON is equivalent to an exchange rate of approximately 2.36 US Dollars or 3.39 Euros.  The Romanian currency RON (or also called the LEU, pl. LEI) is expected to be eventually replaced by the adoption of the Euro by no earlier then 2014.

So, you have decided to make your move and become an expat.   You have an income or a lump sum and your expenses are under control – things are going well and you love your new life.  You know you’ve made the right choice and you aren’t looking back.  But have you dealt with your financial future?  Life as an expatriate has never been more exciting or rewarding, but being an expatriate does not mean that you can ignore the importance of saving and investing. Do you have a small amount of money that you can afford to lose?  Have you ever wanted to ‘play the markets’ …but just a little bit? Then these books are for you. Speculating on ‘futures’ or ‘forex’…the money markets, is always risky, and requires skill, but these two excellently concise eBooks will give you an idea of how to make some money, and not lose too much.

As of November 2007, there are 54 companies and 5 sectorial investment funds (SIFs) traded on the BSE.  The RASDAQ or the Romanian OTC market is also traded on the BSE platform and comprises approximately 6,000 companies.  The BSE and RASDAQ are an electronic order driven market and all brokerage houses trade remotely from their offices.  The number of trading sessions was increased to five days a week starting in April of 1997.  Trading generally takes place between 9:30-14:30 Romanian Time (GMT +2) within the following parameters:

09:30-10:00 – Pre-opening
10:00-14:15 – Continuous trading
14:15-14:30 – Pre-closing 

The BSE
The Bucharest Stock Exchange, alternately known in Romanian as the Bursa de Valori Bucure?ti (BVB) has its stocks broken into 3 tiers based on liquidity; tiers 1-3.  Tier one shares are the most liquid of the market equities.  Tier I requirements include a free float held by at least 2000 different shareholders, profitability in the past two years, a business plan for at least the next two years and equity of at least 8 million Euros, and the remainder fall into tier II:  Shareholder equity of at least 2 million Euros; there are currently no tier III stocks. 

BSE Stocks

Tier I
 

 ALT   ALTUR S.A.
 ALU  ALUMIL ROM INDUSTRY S.A.
 AMO  AMONIL S.A.
 APC  VAE APCAROM S.A.
 ARM  ARMATURA S.A.
 ARS  AEROSTAR S.A.
 ART  T.M.K. ARTROM S.A.
 ASA  AGRAS VIENNA INSURANCE GROUP S.A.
 BRM  BERMAS S.A.
 CBC  CARBOCHIM S.A.
 CMF  COMELF S.A.
 CMP  COMPA S.A.
 COMI  CONDMAG S.A.
 COS  MECHEL TARGOVISTE S.A.
 ECT  GRUPUL INDUSTRIAL ELECTROCONTACT S.A.
 EFO  TURISM HOTELURI RESTAURANTE MAREA NEAGRA S.A.
 ELJ  ELECTROAPARATAJ S.A.
 ENP  COMPANIA ENERGOPETROL S.A.
 EPT  ELECTROPUTERE S.A.
 EXC  KANDIA – EXCELENT S.A.
 FLA  FLAMINGO INTENATIONAL S.A.
 MECF  MECANICA CEAHLAU
 MEF  MEFIN S.A.
 MJM  MJ MAILLIS ROMANIA S.A.
 MPN  TITAN S.A.
 PCL  POLICOLOR S.A.
 PEI  PETROLEXPORTIMPOR S.A.
 PPL  PRODPLAST S.A.
 PTR   ROMPETROL WELL SERVICES S.A.
 RRC  ROMPETROL RAFINARE S.A.
 SCD  ZENTIVA S.A.
 SNO  SANTIERUL NAVAL ORSOVA S.A.
 SRT  SIRETUL PASCANI S.A.
 STZ  SINTEZA S.A.
 TUFE  TURISM FELIX S.A. BAILE FELIX
 UAM  UAMT S.A.
 UCM  UCM RESITA S.A.
 VNC  VRANCART S.A.
 ZIM  ZIMTUB S.A.

The RASDAQ
The RASDAQ (Romanian Association of Securities Dealers Automated Quotation) system, or the over-the-counter market, was established in September, 1996.  The market, which was modeled after the United States NASDAQ trading system, was created in order to enable trading in the shares of some 6,000 companies that were privatized following the Romanian Mass Privatization Program.  Following the absorption of the RASDAQ by the BSE at the end of 2005, all the RASDAQ listed securities are now traded on the BSE’s platform.

The RASDAQ equities are also broken into 3 tiers by liquidity:  Tier I-R through Tier III-R.  Since there are approximately 6,000 shares listed on this exchange segment, Tier I-R stocks are listed solely as reference:

TIER 1-R

 AVBU  AVERSA SA BUCURESTI
 BRCR  BRAICONF SA BRAILA
 CGIU  CARGILL CEREALE SA BUCURESTI
 ELMA  ELECTROMAGNETICA SA BUCURESTI
 PTRO  ARCELORMITTAL TUBULAR PRODUCTS ROMAN SA
 SEVE  SEVERNAV SA DR. SEVERIN
 SNBB  AKER BRAILA SA BRAILA (SANTIERUL NAVAL)
 UPET  UPET SA TARGOVISTE 
 VEGA  ROMPETROL SA BUCURESTI

Main Indices
BET (BUCHAREST EXCHANGE TRADING)
Number of Stocks:  10
BET, the first index developed by BVB, is the reference index for the BVB market. BET is a free float weighted capitalization index of the 10 most liquid companies listed on the BVB regulated market. Current components of the BET index include TLV, SNP, BRD, RRC, IMP, TEL, BIO, ATB, BRK, and TBM.

BET-C (BUCHAREST EXCHANGE TRADING - COMPOSITE INDEX)
Number of Stocks:  variable; currently 54
BET-C is the composite index of the BVB market. It is a market capitalization weighted index. BET-C reflects the price movement of all the companies listed on the BVB regulated market, Ist and IInd categories, excluding the Sectorial Investment Funds (SIFs).

BET-FI (BUCHAREST EXCHANGE TRADING – INVESTMENT FUNDS)
Number of Stocks:  variable; currently 5
As the first sectorial index launched by BVB, BET-FI reflects the price movements of the investment funds (SIFs) traded on the BVB regulated market. BET-FI is a free float weighted capitalization index. The index methodology allows BET-FI to become an underlying vehicle for derivatives and structured products.  Current components of the BET-FI index include SIF1, SIF2, SIF3, SIF4, and SIF5.

ROTX (ROMANIAN TRADED INDEX)
Number of Stocks:  variable
ROTX is a free float weighted capitalization index and reflects in real time the price movement of "blue chip" companies traded on the BVB market. Calculated in RON, EUR and USD, and disseminated in real-time by the Wiener Borse (Vienna, Austria Stock Exchange), ROTX is designed as a tradable index and will be used as an underlying vehicle for standardized products.  Current components of the ROTX index include SNP, TLV, BRD, RRC, IMP, TEL, BIO, ATB, BCC, TBM, and FLA.

Blue Chip Company Summary
 
 

RAQ-I
Number of Stocks:  variable
RAQ-I has been launched together with the Excellence Categories on RASDAQ Market, in order to reflect the overall price evolution of the stocks listed on the First Category (Tier I) of Excellence on the market.

RAQ-II
Number of Stocks:  variable
RAQ-II has been launched together with the Excellence Categories on RASDAQ Market, in order to reflect the overall price evolution of the stocks listed on the Second Category (Tier II) of Excellence on the market.

Performance and Observations 
The Romanian financial indices have seen spectacular positive appreciation over the past several years.  Foreign investment has also increased year over year from private and new EU funding (external cash flows have accelerated with the membership into the EU.)  Romania continues utilizing its own currency and is positive in its prospect to join the European Exchange Rate Mechanism or ERM II by 2012 and move into the Euro as its currency by 2014.  The RON, EURO and USD are utilized ubiquitously throughout the country but the preference for larger personal transactions seems to be in the EURO, which is considered the most stable currency option.

As far as challenges facing the future of the BSE securities market, liquidity is problematic.  Many stocks do not trade every day and volume and bid/ask spreads are erratic, particularly on the RASDAQ.  It is not unusual to identify personal BSE trades in less liquid stocks quoted on the money channel.  The streamlined, near continuous individual trading appreciated with other larger international markets is lacking in many stocks, however most of the “blue chip” or tier I stocks enjoy decent volume and routinely trade daily.  It is also not uncommon to find particular shares temporarily suspended by the BSE due to its trading rules such as a result of notification of ordinary or extraordinary general meetings of shareholders or due to daily trading breaching a control of a maximum daily change percentage.

If fortunate, laggard companies from the privatization era have been snapped up at a discount by foreign companies or investment groups.  With the implementation of new management teams and injection of foreign investment many companies are developing into very profitable expansive businesses.  Indeed many firms have felt the pain of lackadaisical management and corruption from the nationalized era and are true “diamonds in the rough” waiting to be polished.  Foreign direct investment is expected to be in the 5 billion dollar range per year through 2007-09.

Politically, critics have attacked Romania for decelerating its mandated reforms following the EU accession, particularly in sensitive areas of justice and anti-corruption, where no high level politicians or businessmen have yet been judged or imprisoned on charges of bribery or corruption.  Romania has been slow in the implementation of infrastructure projects such as alleviating the overcrowding on roads and the lack of modern motorways. Conversely, just as many post eastern bloc countries have experienced, Romania now sees problems to their extent, and it’s only a matter of time before such problems get solved.

The Romanian market, following the lead of other international financial markets (particularly the US) has experienced volatility from the decline of the US dollar and the US credit and mortgage crisis.  This international sympathetic response may be an overreaction and thus signify an arcane buyers market.  However, a widening account deficit combined with a strengthening RON and depressing interest rates may send a negative signal to short-term investors and change their market sentiment.  In turn, this may generate depreciation pressure on the RON currency and induce short-term volatility on the stock exchange.  The last quarter of 2007 seems to be experiencing such pressures for the BSE market although previously the market indices have seen strong year over year growth.
 

Foreign Investment
The BVB recognizes growth will develop from further outside global investment.  Opening an investment account as an individual foreign investor to trade securities in Romania is allowed and quite simple to accomplish.  Many brokers seek multilingual sales reps to service foreign clients.  Most brokerage houses and banks require at least one form of identification, typically your passport.  A few investment firms such as Vanguard S.A. brokerage have application forms and online trading platforms in both English and Romanian--with an initial minimum investment requirement of 3000 RON.

Accession into the EU has opened inflows of financial support through its funding.  As long as requirements of funding are met, agriculture, infrastructure and the environment industries will be the net beneficiaries of substantial accession process funding.

Outlook
The increasing of investment, rising credit availability, competition and sophistication of many Romanian markets should gradually result into an acclimation into the western world economy. As a result, Romania will appreciate creating cheaper and more convenient solutions for consumers while developing improved logistics; building on delivery channels resulting in a growing environment for business.  An increasing C/A deficit and inflationary growing pains of a market in its infancy are challenges requiring stringent oversight and direct management by the political leadership and the central bank. 

Per a European Commission forecast, economic growth across the EU will slow in 2008 because of a weaker US economy and problems with global financial markets.  The EC forecasts a rate of growth of 2.4% for 2008 as compared to 2.7% in 2007, this slowing growth may be taxing on the Romanian markets, nonetheless, Romania has certainly shown the world it is capable of prolonged, strong growth as evident in the past several years of modern expansion.

Websites

http://www.bvb.ro  Bucharest Stock Exchange; in English and Romanian Languages

http://www.cnvmr.ro/  Romanian National Securities Commission

http://www.vanguard.ro  Romanian Brokerage with Internet trading platform in Romanian and English Languages

http://www.asociatiabrokerilor.ro/ Romanian Broker Association

Disclaimer:  The above information is a summary of published data and is not intended as legal or investment advice. The author disclaims any liability to any person or entity in respect of the contents of this article.
 

Austrian Money Secrets - Austria is one of the world’s best kept financial secrets.  The privacy of banking is protected by Austrian law and the country offers access from the euro-zone to the rapidly growing economies of Eastern Europe. Austrian Money Secrets shows you how to use an Austrian bank account as a starting point for access to investment opportunities not only in Austria but throughout the world. You'll also learn what it's like to live in Austria and how you can qualify for residency. In this book you will find out: That minimums for opening an Austrian bank account are among the lowest in the world; most non-Austrian investments made by non-residents through an Austrian bank do not attract Austrian taxes.  Austrian banks are safe, with strict internal controls, and investments are covered by a deposit guarantee scheme. The author will also introduce you to the other significant advantages of Austrian bank accounts