International stock markets fall. Major corrections in Romania

The Bucharest Stock Exchange opened on Tuesday with a massive 7% correction, recovering some of the loss (1.7%) before noon. Still the indexes remain a lot below the levels recorded on Monday. Liviu Moldovan informs on his blog that the descending trend severely affects all the international stock exchange markets.

In Bucharest, the BET index fell the most at the opening of transactions, 7.85%, recovering up to -5.47% before noon.

All the international markets see an abrupt fall, Liviu Moldovan informs, panic being already stirred among investors. “Nobody wants to hold shares. Major mutations take place in both estimates and investors’ portfolios. The fear of a recession of the American economy sends the stock exchange markets to free falling”, Moldovan comments, mostly quoting the international media headlines.

The indexes on most markets fell over 7%, the same percentage being recorded on emerging markets as well. The shockwave also affected the Forex market. German DAX index decreased 7.16%, losing 523.98 points, down to a level of 6,790.19 points.

European index EuroStoxx50 fell 7.31%, down to 3,703.05 points, while the London index, FTSE, lost 5.48%, down to 5,578.20 points.

Same shock was recorded on emerging markets: Hungarian index BUX fell 3.07%, Poland index WIG lost 5.56%, Slovenia index SBI decreased 4.14%, while Bulgarian SOFFIX index recorded an abrupt 6.59% loss.

Romania has also seen similar losses, the BET index losing a final 4.6%, the BET-FI index, falling 5.01%, while the national currency, RON, followed the trend. Romania has serious problems attached to the issue: an inflation target far from achieved in 2007, a current account deficit reaching 14% of the GDP and recent warnings from rating agencies.

From all these aspects, Liviu Moldovan concludes that Romania is and will be exposed to two major category of problems: some deriving from the international markets and some caused by interior risks.

„The recent falls were triggered by fears of a global recession, after growing concern that a proposed US stimulus package, which would involve about $145bn (£76bn) in tax cuts to encourage spending, might not be enough”, BBC comments.

„Traders said steps announced last week by President Bush to kick-start the U.S. economy are too little too late. They got no direction from New York, because U.S. markets were closed”, CNN added.

A debate on the subject takes place on Liviu Moldovan’s blog.