ZF Today’s opening at the Stock Exchange. The investment at Hidroelectrica exceeded 5% in…

♦ For listed companies in which the state is a shareholder with more than 50% of the company, the exposure threshold is 10%, compared to 5% in the case of the other companies.

Some pension funds sold their holdings in Banca Transilvania and OMV Petrom in March in order to fall within the legal limit of 5% of assets, but they do not touch the issuer Hidroelectrica even though this threshold was exceeded, considering that in the case of the companies majority owned by the state, the exposure limit is 10%.

“Our legislation is a little biased. For listed companies in which the state is a shareholder with more than 50% of the company, such as the case of Hidroelelectrica, the limit is increased from the five percent that is generally applied to all companies to 10 percent”, says George Moţ, owner of the platform DesprePensiiPrivate.ro, within the latest edition of ZF Deschiderea de Atoje.

Hidroelectrica remains the largest investment of pension funds, 6.6 billion lei, and Banca Transilvania exceeds 6 billion lei. Next comes OMV Petrom, with 5.98 billion lei in assets, followed at a slightly greater distance by Romgaz, in fourth place, with 3.85 billion lei.

“Don’t expect to see sales on Hidroelectrica anytime soon. The exposure will probably increase in the next period, and if we look at the transactions we will see anyway that Hidroelectrica is one of the issuers that is being acquired in the future. We see the BCR and BRD funds on Pillar III, which continue to buy Hidroelectrica”, adds George Moţ.

What else George Moţ declared:

Pillar III exceeded the threshold of 5 billion lei. It is the first time that this happens and we hope to see this evolution and this growing trend in the future as well. Another novelty, this time on Pillar II, is the fact that the first contributions on the new rate of 4.75% were collected in March and we have contributions of 1.46 billion lei. We have an increase of approximately 30.3% in the value of the gross contributions that were paid to the private pension funds. We also see the fact that the value of the average contribution increased to 358 lei. We see an equally large increase, the same percentage, in the case of the average contribution.

As good news, both Pillar II and Pillar III, we see a first quarter in which the profit reaches 4.7 billion lei, and considering that we have those historical developments on the stock exchange, the profit in March alone exceeded 3 billion lei. Most of the profit of 4.7 billion lei is obtained in March and comes mainly from the stock market sector.

In the platform that I create and that I make available to everyone, the profit is actually the net profit calculated by absolutely all commissions. It is the net profit seen from the participant’s point of view, what is left for me as a participant after deducting commission from the asset, after deducting transaction fees, custody and storage fees, etc. Very importantly, it is also adjusted with the value of the payments made. As a small observation, we do not have the data for March yet. Therefore, the profit we see in March, of 3.1 billion lei, will be higher when we see the data for payments the following month.

We also see the average value of the account, which reached 15,665 lei. The idea is that if we look at the pillar we will see a difference between Pillar II and Pillar III. We see on Pillar II over 16,000 lei, while on Pillar III the average value of the account is somewhere around 6,800 lei, but increasing for both pillars. This increase reflects this profit obtained by private pension funds.

The difference between the pillars is primarily caused by the number of participants. We have a much smaller number of participants in Pillar II compared to Pillar III. We see 8.9 million participants in total, but if we break them down, there are 8.2 million in Pillar II, and only 700,000 participants in Pillar III. It is a growing trend. We see optional pensions becoming more and more popular, but they are still far from Pillar II. A second cause of these lower assets also relates to the average contribution. If we saw in Pillar II a value of almost 360 lei per participant, in Pillar III it is somewhere around 158 lei. If we consider that in Pillar II 358 lei is equivalent to a percentage of 4.75% of the salary, we see that in the case of Pillar III it is less than half of this value, so the savings rate in Pillar III is a little over two percent of salary.

What is interesting? If we look at Banca Transilvania and OMV, we see that the value of investments in these issuers is increasing. For example, Banca Transilvania has an increase of over 300 million lei, and if we look at OMV, it also has an increase from 5.5 to almost 6 billion lei, so almost half a billion lei increase.

If we look at the transactions, we will see that we actually have many transactions, but let’s not go into each one of them. Banca Transilvania, for example, increased the value of this investment at the same time that the pension funds sold. More than a quarter of the turnover with Banca Transilvania was carried out by private pension funds and most of them sold. We see in particular Metropolitam which sold the most.

It’s not necessarily a record. We still see such high turnovers. Instead, it’s the first time we’ve seen such turnovers more per sell than per buy. If we look at sales alone, we see that over a fifth of all turnovers were sales of private pension funds. Not all of them sold, there were some funds that also bought, as we see those from AZT your future on Pillar II and a somewhat smaller amount at Raiffeisen Accumulation on Pillar III.

If we also look at OMV Petrom, we see the same behavior, in which an important turnover, over a fifth, 21.08%, was made by the pension funds, Most of them sold, and we have those from Raiffeisen Acumulare, but with an insignificant amount compared to the other transactions. We see, for example, Metropolitan, so we also saw Banca Transilvania and OMV Petrom selling, and quite a large amount, over 40 million shares.

Now, let’s not misunderstand these transactions. It is not about the change of strategy or the fact that these funds, especially Metropolitan, would like to make the exit or they no longer trust these issuers. It is simply about reaching legal limits. Practically, these funds are obliged to sell by the legislation in force, because the legislation in force does not allow investments in the shares of a single issuer to exceed five percent of the fund’s assets.

If we look a little at how much I own a month ago, in February, and especially at Metropolitan, which sold the most of the two, we see that in February Banca Transilvania was already at five percent, and OMV Petrom at 4.94 %. What happened in March? Both Banca Transilvania and OMV Petrom grew in pace with the stock market. More precisely, Banca Transilvania had the same pace as the BET index, an increase of around seven percent, and OMV Petrom had a slightly higher increase, somewhere over nine percent, which made the value of these holdings increase. However, this was not enough for the shares invested in these issuers to exceed.

What else happened in March? If we look at government bonds, we see that they have kind of hit their stride. What this means? Shares have a fairly limited share, just over 20 percent. The vast majority of investments are in government bonds. For an issuer to grow in weight, it should grow at a faster pace than other assets. Because we know that we have the government securities, they did not go up or down, instead, the stock market increased a lot and these issuers increased a lot. Both Banca Transilvania and OMV Petrom left this 5% limit. If we return to the transactions, we will see that they also sold BCR, BRD, and on OMV Petrom they also sold the funds managed by NN on Pillar III.

In fact, if we look at Banca Transilvania and OMV Petrom, we will see that in most cases they are over four percent, including AZT Viitorul tău, which we saw took advantage and bought a little of Banca Transilvania, but it is possible soon to be in the situation of having to sell it.

Metropolitan ended March with an exposure to Petrom of 5.06%. Banca Transilvania is not far either, it is at 4.95%, but certainly, given the exposure to OMV Petrom, which had already exceeded five percent, we will most likely see sales in April as well. The reason is again related to the exposure to government securities. Even if in April the increases on the stock market were no longer so significant, on the other hand, on government bonds we saw an increase in yields, which implies a decrease in the value of government bonds. As a result, this puts more pressure on pension funds, making the weight of these shares appreciate even more and being forced to sell them.

We see that Metropolitan was forced by circumstances to sell Banca Transilvania and instead bought BRD, which was also bought by AZT Viitorul Tău. Among other interesting transactions also related to Metropolitan, because it is indeed one of the most active, we see how they continue to buy, for example, at Medlife, a quarter of the circulation is done by Metropolitan Life.

Another interesting issuer is One Unitod Properties in this first quarter, because in principle only Metropolitan and the BCRs had, somewhat less, investments in this issuer. I saw that the BCR had significant transactions on One in January, but in February I had the surprise that the funds managed by Carpathia, the former Aegon, invested for the first time both in Pillar II through the Vital fund, and in Pillar III through the fund Essential. A significant amount was then bought in an accelerated book building. It seems that those from Metropolitan will not let themselves down and in March they again bought shares in One.

The battle between the pension funds for this issuer is becoming more and more intense. However, the star towards which all the funds are reorienting is the one in fourth place in the investment list, namely Romgaz. We see a significant turnover on Romgaz, over 60 percent of everything traded. A significant share, 22 percent, was bought only by Metropolitan.