BSE Shares and Bonds

When a person buys shares in a company, that person is buying a part of that company. This means that an investor shares in the company's performance in the form of profits which can be distributed as dividends, and/or capital growth, through the value of the shares increasing. Trading shares or bonds issued by companies listed on the Bucharest Stock Exchange can only be achieved through a Financial Investment service company (SSIF). This service is among a variety of services that is offered by our company for investors interested in the local Capital Market.

What are shares?

Shares are securities certifying a property right to the share capital of a company. Shares are investment instruments that can be held for a short, medium or long -term, while their evolution is correlated with the evolution of the financial situation and business strategy of the company as well as of the company’s sector and the general economic dynamics.

Benefits of investing in shares

The stock market provides one of the best opportunities to achieve your long-term goals. People invest in shares either to diversify or to maximize their wealth compared to other traditional and more conservative investments – either through share price growth, or via income paid as dividends.

Although past performance is no indication of future performance, history suggests that shares have outperformed other types of investment over the longer term. 

Capital growth occurs when the value of your investment increases. People invest in shares because they offer the possibility that their price will rise. Owning shares in a company with a rising share price is one way to achieve capital growth.

As a shareholder you are entitled to share in the company's profits or earnings. For many investors a key criteria in selecting shares, is whether the company pays dividends and the size of these. Companies pay dividends from their net earnings. 

Tax benefits

In Romania the current taxation law allows for profits derived from selling securities to be taxed at 16%.

Diversification

It is always better to spread the risk across different investments. This is the same with shares. The Romanian stock market is offering a wide choice of companies in which to invest. These companies are involved in a wide range of industries covering most sectors of the economy including financial services, industrials and healthcare. By investing in a range of companies you can spread your risk.

Liquidity

Investing in shares gives you flexibility. You can buy and sell shares quickly. You can sell shares and generally have access to your money in no more than three days. Other investments often take longer to sell and get your money back.

What risks are there?

Shares present benefits as well as risks.  History shows that shares, as a long-term investment have the potential to provide better returns after tax than any other major investment.  However, the investment in shares present some risks such as Position risk (stock market movement and the financial position of the company can influence the price paid for shares) and Sector risk (In case of economic instability in a particular sector, companies that belong to the same economic branches will be affected in a negative way). For these reasons, diversification of investment portfolio must take into account the choice of issuers that are active in different economic sectors, thereby reducing risk such as the ones mentioned above. Other major risks consist of (i) liquidity: some stocks have better liquidity than others, (ii) economic risk: in an economic recession, the shares’ prices reflect the economic sentiment and outlook for the whole country and (iii) change in tax regulation can affect your gains and losses.

What are bonds?

A bond is a debt security. When you purchase a bond, you are lending money to a government, municipality, corporation, or other entity known as an issuer. In return for that money, the issuer provides you with a bond in which it promises to pay a specified rate of interest (Coupon) during the life of the bond and to repay the face value of the bond (the principal) when it matures, or comes due.

Generally, bonds are a safer investment and its risk level is reflected in its yield, another name for return on a bond investment. “Current” yield is a function of the bond’s:

  • Coupon rate:  the annual interest rate the issuer promises to pay the investor, stated as a percentage of the bond’s face value or “par,” which is the amount the investor can expect to have returned on the bond’s maturity date.
  • Current price:  which may be a premium (more than) or discount (less than) in relation to the bond’s face or par value.

Globally, there are different types of bond offering a large gamma from advanced to less advanced investors. The local Bond market is quite limited at the moment with few corporate and public bonds.

What risks are there?

There are however few risk associated with trading bonds as well, the main ones being Interest rate risk (when interest rates rise, bond prices fall; conversely, when rates decline, bond prices rise. The longer the time to a bond’s maturity, the greater its interest rate risk) and Inflation risk (the possibility that the future value of investment or revenue attached to be eroded by the inflationary effect).

Money transfer through bank account

We hereby inform you that starting with 15.06.2015, Unicredit Tiriac Bank is the settlement bank for the trades executed on the Bucharest Stock Exchange. Therefore, the provisions of the financial investment services agreement regarding to the bank accounts shall be amended accordingly and any of your payments related to such contracts shall be made in the following accounts:

BANK ACCOUNTS  opened with UniCredit Tiriac Bank - Titulescu Branch:

(RON) RO75 BACX 0000 0011 4466 9001 (for BSE transactions)

(EUR) RO91 BACX 0000 0011 4466 9004 (for BSE transactions)

BANK ACCOUNTS opened with Piraeus Bank - Aviatiei Branch:

(RON) RO58 PIRB 4212 7164 8800 4000 (for BSE transactions)

(EUR) RO92 PIRB 4212 7164 8800 3000 (for BSE transactions)

(USD) RO77 PIRB 4212 7164 8801 2000 (for BSE transactions)