Opportunities and decisions

Opportunities and decisions

Identifying and keeping the focus on the economy’s fundamentals should be the right attitude this year, considers Razvan A. Rusu, Investments Director and Member of the Executive Committee, Certinvest Asset Management.

2013 is a year of opportunities and decisions for Romania. After the last year, when the economy took a backseat from the news headlines giving the stage to politicians, now, with a new government in place and a large coalition supporting it, we should see more focus on the economic fundamentals. Markets have fed on global optimism and the end (or at least postponement) of the political war. This is why we have seen growth in local equity markets and relative stability of the EUR/RON rates over the past months. The robust demand that we have seen in government debt is expected to continue throughout the year. 


Nevertheless, this is just a stage setting for the big decisions that lie ahead for the government, who should embark on a journey of restoring credibility and attracting FDI. And we see opportunities in different areas, but it will all depend on factors such as: the commitment from the government for reforms and privatization, the recovery of demand in the EU and the development of new sectors that could attract FDI in the context in which the fight for resources on a global scale is more competitive than ever.



There are several issues pending from last year that will need to develop this year and some of them seem to raise challenges following cabinet-attribution reshuffling. First and foremost, the development of infrastructure which, although has been a top priority for at least a decade, we shown extremely poor efficiency in the spending of the very large amounts of money. The new strategy for developing the Comarnic –Brasov highway, personally assumed by the Prime Minister, plus a number of more exotic projects could re-ignite a program that has significantly underperformed and that could provide jobs and growth. Furthermore this is an area where European funds could be attracted with relative ease. The privatization program, via the local stock exchange is also a very important step and although signals have been mixed, we have confidence that at least some of them will go through the process concomitantly with the implementation of the new private management program. The reform of the healthcare system, which  has been in the pipeline for some years, is probably the one issue that could pose the largest political risk and therefore it is my belief that it will further develop at a time when political risk will be lower.  




The development of emerging industries such as the green energy, for example, is on its way, but in my view, there will be different dynamics within the market segments. We might see more investments in solar energy and biomass in 2013, but wind could be overheating. Nevertheless, we are looking at increased pressure on certificate allocation for green energy, given the fact that Romania offers some of the best conditions in the region. Furthermore, 2013 is a year of decisions in mining and shale gas that could attract significant investments in the medium to long term.


On the downside, we might see a materialisation of the risk that exports lose traction, as a result of sluggish recovery in the European markets, particularly in the auto and heavy industries, which weigh significantly in Romania’s total exports.


All in all, it will be a mixed year in terms of outcomes, as it will largely depend on political will and ability to turn opportunities into lucrative business and make sound decisions for the medium and long term.