The value of the top 100 companies on the Bucharest Stock Exchange has dropped 37% in the past nine months, from 36.6 billion euros to 23 billion euros, as the market has been facing the worst decline of the last decade.
Since mid-July 2007, when most of the companies listed on the Bucharest market peaked to all-time highs, the capitalisation of the top 100 stocks has lost more than 13.6 billion euros, going down to the 2006 or even the 2005 levels, in some cases.
The plunge mainly hit the medium and small companies, which dropped 50% or even more, whereas Petrom, BRD and Banca Transilvania, three of the top four companies on BSE, lost 27% on average.
The value of the top four companies on the market has decreased, on average, by 5.8 billion euros in the last nine months, from 20.4 billion euros to 14.6 billion euros. Also, the rest of 96 companies in the ranking have lost 7.9 billion euros, as their capitalisation dived from 16.2 billion euros to 8.3 billion euros. Analysts feel that the steeper declines posted by medium and small companies on the Stock Exchange were triggered by their more speculative nature, but also by the lower liquidity, which made it difficult for massive-selling investors to find buyers.
"Blue-chips also attract another type of investors, namely institutional investors, which don't panic so easily. In the case of Petrom, another explanation may be that, since it is an integrated company, it is not so sensitive to macro factors. Banks have historically enjoyed support from investors that trust the banking system," says Andrei Anghel, analyst with the Confident Invest brokerage.
Other analysts say that the stocks' liquidity played a major role in the way some companies bore the market downward trend.
"Volatility is higher when liquidity is lower. When in a favourable context, small companies grow more, wherea
