10 Simple reasons why; Investors are flocking to Romania.
Romania is fast becoming a growth area and many savvy Investors are meeting up in Bucharest, here our ten simple reasons why.
Solid service Industry
Following rapid economic growth in the 2000s, Romania has an economy predominantly based on services. Romania is a producer and net exporter of machines and electric energy, with companies like Automobile Dacia and OMV Petrom.
It has been a member of NATO since 2004, and part of the European Union since 2007. Around 90% of the population consider themselves as Eastern Orthodox Christians.
After five years of deleveraging, the Banks confirmed that the lending cycle is turning while absolute levels of bank lending are low, with the central bank setting the 2013 figure at 34.8% of GDP, bottoming at around 33% in 2014.
With Klaus Lohannisin recently elected, voters have delivered to politicians a clear message of their trust in reform and modernisation, and a continuation of anti-corruption policies, which have seen over 1,000 convictions for graft and related offences in Romania so far this year, including 85 ministers, parliamentarians, county prefects, mayors, state firm managers, judges and prosecutors.
With Romanians averaging EUR 4.6/hour around half Czech levels, a third of Greece and a quarter of Spain all means that Romania can easily capture the next wave of foreign direct investment (FDI) across the region.
The economy should perform well over the next few years, as interest rates continue to fall, bank lending recovers and decisions delayed pre-election on taxes, tariffs and investment clear. The EU funds absorption rate has reached almost 40% (from a low base).
The stock exchange and regulators are committed to improving investor access to the stock exchange and boosting liquidity, with the ultimate aim of expanding the market from frontier to emerging markets by MSCI.
Heading into a period of potential interest rate increases by the US Federal Reserve, Romania’s current account deficit is low and fully covered by FDI, EU funding and worker remittances. Romania is a relatively small net energy importer and thus benefits from declining energy prices.
There is a tipped balance of Mutual Funds to Equities which can only see a correction: Pension funds have approx. EUR 4bn of assets of which only 19% is invested in equities, which is growing at around EUR 1bn per annum; mutual funds have around; EUR 4bn of assets of which only around; 5% is in equities. Five year government bond yields have slumped from 4.7% to 2.7% over the course of 2014, which has the potential to encourage a shift of funds from fixed income into equities.
Investors expect to see more names to come to the market. The next 12-18 months could see IPOs of utilities Hidroelectrica and CE Oltenia, while the Romanian Post Office (Posta Romana), Constanta port, Bucharest airport as well as salt mine, Salrom.
Here are a few other tips Investors are eyeing up:
New Europe Property Investment
To receive a prospectus of the types of companies our Investors expect to do very well and float over the next few years contact Asia Pacific.