Bursa de Valori Bucuresti SA ($BVB)

Welcome to today's virtual conference where 4 publicly traded companies from Romania will be presenting. After years of strong growth, the Romanian economy has recently cooled off somewhat. At the same time, the country remains one of Europe's most important nearshoring locations with an industry that is deeply integrated into European supply chains. Romania is a magnet for international investors. Foreign direct investment stands around EUR 120 billion to EUR 125 billion. And in 2024 alone, 94 new projects were announced, the highest number of years. This momentum is driven by stable framework conditions, a competitive cost structure and massive investments from EU programs. Shortly, the Head of Market Data Sales & Product Development, Alexandru Stefan from the Bucharest Stock Exchange, will open the conference with an assessment of the current market situation. This will be followed by the company presentations from Green Tech International, MedLife and Banca Transilvania. So thank you very much for joining us today. And with that, I give the floor over to you, Alexandru.

Thank you, Sarah, first of all, for making this warm introduction. Good morning, and thank you very much for all people attending the event. From my end, it is a pleasure to be part of Romania on-air event and to contribute to this discussion with a market overview focused on Romania for investors looking at opportunities across the Central and Southern Eastern Europe. Over the next 20 minutes, I will briefly cover the structure of the Romanian capital market, recent market performance as well as key highlights, as well as some of the developments and growth initiatives that continue to support the market's evolution. My aim for today is to offer a concise and balanced perspective on how Romania is positioned today and why it is increasingly relevant in the regional investment landscape. I look forward to the discussion and to your questions during the Q&A session. I have prepared this presentation. First of all, I would like to touch on the solid performance that happened last year. So last year, we had a total return of 55% in terms of the main index. This has been the best performance in the last 16 years. And coming into this year, we see a solid start of the year as well. So from the beginning of the year, I believe the data is as of Friday. We have a performance of 20% for the main index. So again, we see a continuation of the solid trend that happened last year. In terms of market capitalization of the regulated market, we sit at an all-time high currently. So the domestic market cap is of more than [ EUR 70 billion ]. This is 20% of the GDP. So as you can see in this slide, this has been steadily increasing over the last years. If we include also a very big company that is dual listed at the Bucharest Stock Exchange, namely Erste Group, the total market capitalization is more than EUR 100 billion, making the size to GDP close to 30%, yes. So I would say this is a very positive performance for the market. In terms of liquidity, which is absolutely necessary for any important capital market, we have seen an increase as well. So from the beginning of the year, the total liquidity is up 40% compared to last year, possibly because of the continuation of the momentum that we have seen in terms of the performance. This liquidity comes both on all instruments, including treasury bonds as well as equity only. So we are currently sitting at close to EUR 50 million average daily trading value, including all instruments, while equity instruments have an average daily liquidity of EUR 28 million. As you may know, in terms of our sectorial distribution of the main market, we are a market focused on [indiscernible] energy financials as it's the case for emerging markets as well as for emerging Europe. However, in the last years, with some new IPOs, we have seen increased presence towards the communication services. We are looking at Digi Communications, which has a growing position in Europe. Also, the health care sector has been developing with the IPO of MedLife, but also with the increase of other companies from this sector as well. We've seen also IPOs in industrials, the IT sector, we have high hopes for this sector given its size in the Romanian economy, and we have seen a positive development towards this with companies coming first to the AeRO market, which is an MTS. And after a few years of accommodating with the market and developing their businesses, they have transitioned towards the regulated market, and we see a continuation of this trend over the next years. In terms of domestic institutional investors, first of all, we are talking about pension funds. So the assets under management of pension funds in Romania have grown significantly over the previous years. They are now currently sitting at EUR 44 billion in assets under management. We have seen a similar development in terms of the open investment funds with their assets under management now close to EUR 8 billion and an increasing allocation towards the equity market. This is also -- this also can be seen at the number of investors that invest through these mutual funds through this local investment funds. For the first time ever last year, the number of investors has outpassed 1 million. Another positive development in terms of local investment funds is the growth of the ETF market, which are benchmarked to Romanian equity indices. This has now surpassed EUR 300 million. Last week, we saw also another listing of an ETF reference to the main market index on a total return basis. This new listing is the ETF of Banca Transilvania, the largest bank in Romania and also a very important issuer on the Romanian capital market. So yes, in terms of domestic institutional investors base, that's definitely a good position that we are -- that we currently have. Going to retail investors, local as well. So we have seen a continuation of the increase from the previous year. We have ended 2025 with close to 300,000 retail direct accounts to the exchange. It is fair to say that 57% of them are active investors. It is also important to note that 20% of them invest only in treasury bonds issued by the Romanian government. But that's a very important development that we have seen so far because there is people coming and investing into treasury bonds issued by the Romanian government, follow their investment into equities after a period. So we definitely see some convergence from the investors in government bonds into the equity markets following their accommodation with the capital market. Yes. In terms of listings, if we look at the previous 5 years, we had more than 250 listings, accumulating a value of close to EUR 20 billion. The majority of these listings were government bonds. Again, we are talking about the Fidelis government bonds program of the Ministry of Finance. That's a very important driver for the market in terms of retail accommodation and investment. We also had the IPO of Hidroelectrica in 2023, which was the biggest IPO in Europe at that time. And another declaration that, okay, big IPOs can be done in the Romanian capital market, can be easily done. We've also seen some recent listings as well, and I believe I will touch on this aspect in the next slide. This slide includes the biggest listings from the main market over the last 10 years. Recently, we had 2 IPOs on the main market. We are talking about Electroalfa International, an IPO of $130 million. A company -- this is a company activating in the sector of electrical utilities, an entrepreneurial company, a family-owned business. So this has been a success for the market. It was listed in February of this year. It is important to note that in terms of the IPO, the retail tranche on this company was oversubscribed close to 60x the retail tranche showing again a significant interest from the retail investors towards successful companies, towards companies that have a growth story, to entrepreneurial companies willing to develop towards the capital market. And a very similar development happened with the IPO of Cris-Tim Family Holding at the end of last year. Again, a similar development with the IPO tranche oversubscribed close to 40x. Yes. So there is significant interest both from the domestic institutional investors as well as from the retail institutional investors. And we have seen this time and time again. Yes. Also, it is to be mentioned that most of the companies, if not all of them that came from an IPO towards the main market -- on the main market had a very, very good development in terms of their price as well as total return performance. Yes, if we're looking -- I was mentioning early Hidroelectrica, which was the biggest IPO in Europe in 2023. If we look at the total return, it's close to 64%, and we are talking about a company that is worth now, I believe, is EUR 13 billion or EUR 14 billion. So very good development for companies that came through the IPO on the main market of the Bucharest Stock Exchange. Moving forward because I was mentioning earlier about performance, if we look over 5 years' time, there is a strong performance from the Romanian capital market, and we have compared this with regional markets as well. So over 5 years, we have a performance -- total return performance of 245%. This is very, very strong and is currently sitting as a top performer in the region. If we compare that also with global indices, we see that the difference is significantly higher. So the region performed very well and the Romanian capital market performed very well in terms of -- compared to global indices such as FTSE Global All Cap or FTSE Emerging Markets or MSCI Frontier and that's definitely -- these returns probably you can find them in this region as well as more exotic regions in the world. In terms of market valuation, and this is data provided by Refinitiv, we are currently sitting with the price/earnings for the main index BET at 12.7. So this is an average from the beginning of the year. As we can see, we are sitting higher than the multi-annual average, which is close to 10%. But in terms of related to historical developments, it is not sitting very high, yes. And if we compare this in the region, if we look at the region, we can see that there has been an increase in the price/earnings of the main index. But if we compare them to similar markets, we can see that we are currently fairly valued, I would say, and not overvalued, but the market will decide on this topic as well. Moving to another development of the market, I would say that the promotion of FTSE Russell to the emerging market sales status has been a success. This happened in 2020. From that time, we had net inflows of close to USD 400 million into the companies that were included in the FTSE Global All Cap indices. And the 8 companies that are currently included in the indices are Banca Transilvania, Hidroelectrica, Nuclearelectrica, MedLife, One United Properties, Teraplast, Electrica as well as TTS, Transport Trade Services. We also had one -- we also had one company that exited the FTSE Global All Cap. This is OMV Petrom. And we saw with the exit very muted response towards the market since on rebalancing date when the Petrom closed down only 1% on an average turnover of $78 million on that day. We are looking at new companies that could enter the FTSE Global All Cap indices as well. And it is fairly easy which we calculated with an average 8.7 million daily turnover, Romania could have 10 more companies included in the FTSE Global All Cap indices that attract net inflows from the ETFs tracking these benchmarks. Last year, in June, the Romanian capital market has been classified as an advanced frontier market with the introduction by MSCI of this new subcategory. This has been an important development since the market accessibility -- the market accessibility of Romania by the foreign institutional investors has been again recognized, and this is very important for us and has been well received by the market at that time. And the next objective for us, of course, is the upgrade towards the emerging market status at MSCI as we are currently classified as Advanced Frontier Market. The average -- the assets under management of funds tracking the MSCI Emerging Market Indices are close to $1.4 trillion. There are more than 460 ETFs globally that track the MSCI Emerging Markets Indices. And with that reclassification, net inflows attracted to the markets could be up to $1 billion. In terms of how we are currently sitting at for this potential reclassification, well, we need at least 3 companies. These are the requirements of MSCI, at least 3 companies that meet both size as well as liquidity. In terms of market cap, we need 3 companies of $3.8 billion, free-float market cap of $1.9 billion as well as 15% ATVR in terms of liquidity. We have 4 companies currently that meet both market capitalization as well as free-float market capitalization, but only one company that also meets liquidity. So we need at least 2 more companies to meet the 15% ATVR in order for MSCI to look for a potential reclassification of the market. But if we look at the ATVR figures for the Romanian companies, we can see that starting this year, the figures are improving, and they are closer to the 15% threshold than the previous years. So again, an increase in liquidity is required in order for us to go to the next classification at MSCI. And for that purpose, I would like to touch on a final slide, which includes our significant investment in infrastructure. Currently, our biggest investment is in the local central counterparty with the scope of operationalizing it and add financial derivatives to the market. We have been working on this project for some years now, but there are some milestones that need to be pointed out, which happened recently. So first of all, the authorization file of the local central counterparty has been officially filled at the end of last year. And recently, I believe, in February of this year, the file has been declared as complete, and it is currently pending assessment according to EMIR regulation. Why financial derivatives are important for us? Well, we will be able to have index futures on the market as well as single stock futures. Following these 2 introductions, we will have energy futures as well because the project is done in partnership with the energy market with OPCOM, and yes, we believe this -- the operationalization of the local central counterparty and the launch of the derivatives will bring new liquidity towards the market because we can see there is a significant appetite from the investors towards new sophisticated products that will enable new strategies on the Bucharest Stock Exchange and on the Romanian capital market. Yes. [Technical Difficulty]

Thank you so much for your presentation, Alexandru. So ladies and gentlemen, we are now open for your questions. [Operator Instructions] And during the presentation, we received 2 questions. So I will read them out. They are a bit longer. So an important indicator of [ marketing ] maturity is the ability of the exchange to attract new issuers and support financing across different instruments. From your perspective, what are the main sectors of issuer profiles that could drive the next wave of listings in Romania? And what need to happen for the capital market to play a larger role in financing the real economy?

Thank you for the question. New listings are very important for the market, of course. And we are looking at them very closely and working diligently to attract new listings. And one important area that we believe we will continue to see new listings is from the entrepreneurial companies. As I mentioned previously, we saw the IPO of Electroalfa International, an entrepreneurial company. We saw this IPO in February of this year. Last year, at the end of the year, we saw an IPO of Cris-Tim Family Holding, again, an entrepreneurial company, multigenerational family-owned company. And we believe we will see continued interest from these companies towards the market. Yes. In terms of sectors that we believe the new IPOs will come, definitely considering the macro perspective, we will see continued interest from the broader energy value chain. This is an important sector in the Romanian capital market. It's an important sector in the Romanian economy, and this is strategic importance for the economy as well. So we will see that from the energy sector. Also, we believe we will see new companies from the construction sector. Real estate is very, very big in Romania. Also from the transport sector, technology and definitely agri business. So these are the main sectors that we are expecting new IPOs. And I know that transactions are ongoing. I know that brokers are working on new deals. And this, of course, depends on the market conditions, which would be very important as well as the readiness of the respective companies.

All right. Then the second question is a bit longer as well, but we can cover them for sure. One of the notable developments in recent years has been the increase in the number of Romanian retail investors, which has more than tripled over the last 5 years, alongside a steady expansion of local investment funds and pension assets. How important is this growing domestic investor base for the next stage of market development? And where do you see the biggest opportunity? Retail participation, long-term savings products or a broader financial education?

Yes. In my view, the biggest opportunity will not be to choose between retail participation, long-term savings and financial education because these 3 are connected. Definitely a very positive development of the Romanian capital market has been the increase in the retail participation. And we expect that to continue. Probably in terms of the next 3 years, 3 or 4 years, we will get closer to the 500,000 threshold of retail investors for the Romanian capital market. I'm talking about direct investors because the number of participants to local investment funds has passed the 1 million threshold from last year. But yes, definitely, this is a very positive development that we expect to continue and the 3 are connected. Financial education is very important, and this is being done by all the actors of the Romanian capital market, the exchange, the regulator as well, the buy side as well as the local sell side are working towards financial education and awareness for the terms of the positive developments of the Romanian capital market and the attractiveness, the drivers of the Romanian capital market.

Great. Thank you so much. And with this, ladies and gentlemen, we come to an end of today's event. So thank you, Alexandru, for your time for explaining Bucharest Stock Exchange and the Romanian market environment to us. So if there are any further questions, here are the contact details from Alexandru. So please feel happy and feel invited to contact him. So before we move over with the next conference slot from Green Tech International, Alexandru, some final remarks from your side.

Just I would like to thank everybody for participating. I believe Romanian capital market is a solid example of performance at least in the recent years. We believe in the market. We believe in the participation of the retail investors towards the market. We believe we will see new things on the exchange. So I would advise everybody to stay close to the market and to watch us. And of course, if you have further questions, I am happy to answer them over e-mail or over LinkedIn, if needed. Sarah, [ thank you for ] organizing this excellent roundup event. And thank you, everybody, for participating in the event.

Thank you. Bye-bye.