Fondul Proprietatea Shares Slid Below RON0.5. What's Next?

05.25.2011 ZF English

Shares of Fondul Proprietatea (FP.RO) traded below the 0.5 lei (EUR0.12) level almost the entire Tuesday trading session, hitting a new all-time low, of RON0.4975.

The previous low had been registered on May 12, when the shares dropped to RON0.499 in the opening, but rallied toward the session end.

Brokers say that interest in Romanian stock, in general, has been increasingly lower lately, amid corrections across European markets and talks on Greek debt restructuring and the possible problems of Italy and Spain, which could spark a new economic crisis in Europe.

This context is doubled by several factors strictly related to Fondul Proprietatea, such as the resumed compensations in the stock by the property restitution authority, increasing the supply of shares available for sale on the market.

"It is not only Proprietatea that is traded at a big discount, but SIFs and banks, as well. Nevertheless, volumes are dwindling, there's talk about corrections on foreign markets, about European states' debts. Under the circumstances, I do not see why there should be an extraordinary appetite for Romanian stock, even FP. (...) Shares are highly likely to see further declines. Nobody is saying they are not interesting or attractive, at least in terms of discounts, but this is how the market is right now," explained Laurentiu Floroiu, trading manager with EFG Eurobank Securities brokerage.

Since listing, on January 25, Proprietatea shares fell 23%, and the fund's market value lost EUR450 million, to EUR1.67 billion. (EUR1=RON4.1233)