Erste Sees Romanian Bourse Soaring In 2010 On Lower Risk Aversion

"Romania clearly shows the highest upside potential, since the market was and still is plagued by high risk aversion. Consequently, the indicated performance potential is greatly reliant on a major decrease in risk aversion towards this market," Erste said in its report on equity strategy in 2010.

The Romanian BET index, which tracks the ten most liquid issuers on the Bucharest Stock Exchange, is likely to increase by 77% this year, the report noted.

Among the factors to watch in 2010, Erste mentions a possible takeover of lender Banca Transilvania (TLV.RO) by a major player, transaction that will allow the bank to better perform in a more competitive market.

"Any agreement on a takeover offer in the short term would be highly dependent on Banca Transilvania's capacity to absorb the shocks of the economic recession, which will be seen a few quarters from now," the report showed.

Romanian turbojet parts maker Turbomecanica (TBM.RO) is another potential acquisition target in 2010, Erste said, due to its expertise as a supplier to top players in the sector, such as General Electric, Pratt & Whitney, Rolls Royce and Agusta.

According to Erste, Turbomecanica's shareholders are interested in selling, but the price required is well above the current market price.

In addition, the next year will be "crucial" for the company, due to a considerable increase in its debt service, the report said.

One of the most expected events on the Romanian market, which should boost bourse liquidity by some EUR2 million per trading session in turnover, is the floating of the investment fund Fondul Proprietatea.

The fund, set up to compensate Romanians whose properties were seized during communism, has assets estimated at EUR3 billion and its listing is expected by 2011, the report noted.

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