Romania’s stock market has emerged as one of Europe’s top performers, with the Bucharest BET index surging nearly 40% in dollar terms over the past year, making it the fifth-best performer among over 90 primary equity indexes tracked by Bloomberg. This impressive performance comes despite a slowdown in Romania's traditionally fast-growing economy, which is now expected to revive, supported by interest-rate cuts and moderated inflation. The market's momentum is bolstered by last year’s $1.8 billion initial public offering (IPO) of renewable-power utility Hidroelectrica SA, which attracted more foreign investors to Romania and sparked renewed local interest in the bourse.
Investors are now optimistic about the potential for future IPOs to sustain this growth. Romania's market is also poised for a potential upgrade to an emerging market from its current frontier status by MSCI, possibly as soon as next year. The Bucharest Stock Exchange is making strides to meet MSCI’s liquidity requirements, with plans to launch derivatives trading by mid-2025.
Despite Hidroelectrica’s shares only gaining 11% in dollar terms over the past year, other Romanian stocks have led the rally. The BET index is now valued similarly to MSCI’s emerging-market benchmark index, contrasting with the 30% discount seen in Poland’s larger stock market. Investors are also keeping a close eye on Romania’s upcoming general and presidential elections in December and the government's strategy to reduce one of the European Union’s largest budget deficits.
The buoyant mood in Bucharest is further supported by the government’s consideration of selling stakes in other state-owned companies, including the Bucharest airport authority. The potential MSCI upgrade could significantly enhance Romania’s visibility on the global investment map, attracting additional inflows and benefiting the entire market.
