Erste-BCR Analysis: Bucharest Bourse May Gain 15% By Yearend

05.16.2011 By Andrei Circhelan

The Bucharest bourse could grow by 10% to 15% this year, according to an Erste-BCR analysis, based on forecasts on private lending, the leu's exchange rates and state bond yields.

According to simulations unfolded by the analysts, the local stock exchange has the potential to grow between 10% and 30%, if private lending rises 5%-10% on the year, the euro would stay between RON4 and RON4.1, and yields of euro-denominated government bonds maintain their current levels.

On a nominal level, private lending narrowed in March by 1.3% on the month, to 203.95 billion lei (EUR49.7 billion), mainly because the leu gained ground versus the euro. In real terms, private lending in local currency dropped 0.5%, while private lending in foreign currency narrowed by 2.1%.

The Bucharest Stock Exchange's composite index BET-C rose 9.2% since the beginning of the year, while the 10-share blue-chip index BET rose 8.5% in the same timeframe.

However, the analysts added, the stock market's evolution in the first months of the year, included anticipations of an exit from recession, thus the bourse has some 10%-15% growth potential left.