Gossiping…

Monday, October 13th, 2008

The closed Stock Market and the scenarios…

On Friday the Stock Market of Bucharest did not open, it remained closed. I didn’t notice in the news if it was announced or not, but my friends who know a lot tell me two versions of a similar story (Ofcourse I wasn’t present, I can not be sure): One told me that the Market didn’t open at all, because there were 0 biddings for stocks and the authorities were afraid to open it, as all the prices would be at limit down. The other one informed me that it didn’t open but during the day there were few biddings. People with experience of several years tell me that they never saw something like this in Romania, but on the other hand when London’s FTSE was down 20% last week, a shallow market like Romania is normal to face a huge crisis like this one. Hopefully this week things will be better, I have a big number of people I know, who try their best to get out of there and they still didn’t make it. (My personal opinion for the ones who are out is that now, or soon, is an excellent moment to buy shares with excellent potential in really VERY low prices. As part of my diversification strategy, I will do the same until the end of the year).

Not even major banks don’t trust each other…

“We want to buy X million ron” (I don’t mention the exact number, so as not to uncover my sources). “Ok, this is the price”. “Ok, we agree”. The two treasury departments from major banks in Romania sign all necessary documents. “Good, so now send us the euro and we send you the ron”. “No, you send us firstly the ron and we send the euro”. “No, send us the euro and we send the ron”. “No, send us the ron and we send the euro”. “No, send us the euro first, eitherwise the transaction is cancelled”. “No, send us the ron first, eitherwise we redraw from the transaction”. Last week two major banks in Romania, with an excellent reputation, didn’t trust each other and the deal was cancelled, as no one dared to send money first. Experts say that market = psychology and with this psychology today, there is no market at all.

Euribor of 3 months plus 10% for medium size loan!

“After two months of delays, finally I hope that you have finished all the papers for the loan and you can announce to me the terms, so as to conclude the transaction”. The discussion took place last week in the centre of Bucharest, in a major branch of a foreign bank, established in Romania since many years ago. “Yes, we are ready for you, this is your offer by our bank”. The investor starts reading and at a point his face becomes white. “I am sorry, but maybe there is a mistake here, you are writing in your proposal that the interest will be Euribor of 3 months plus 10%”. “No, this is not wrong, this is our offer”. “But this is unbelievable, what are you talking about? I want to invest, I am a serious businessman, with good profits every year since 2001, well established in the country, client of your bank for several years. You promised to me almost half in the summer and the amount is not even one million euro”. “Exactly, this was in the summer, mister. Now this is our offer”. “You destroy me”. (and with their usual sensitivity) “I am sorry, there is nothing we can do about it”. Euribor of 3 months plus 10% is almost 15,5% interest. Only desperate, “dead” people could accept it.

Euribor of 3 months plus 4-5% for big size loan!

“Where are you, Ilia?” “In Munich, at EXPO REAL exhibition and I can not talk, I have to be in the other side of the Exposition Centre, as I am participating in the panel for Romania”. “You know what? People lost their mind, it is incredible what is happening these days”. “Listen, I understand that normal people can face problems this period, but you are a millionaire, having probably one of the best reputations in Romania, rivers of cash flows and very well studied projects. So I think that you exaggerate and I am really in a hurry”. “I exaggerate? Damn you, they offered me today Euribor of 3 months plus 4% and they told me I should be thankful they didn’t give me 5%, they lost their minds”. “If even YOU have this problem, I understand that the situation is really bad. For how many million were you talking about?” “A lot, but as they don’t give me anything serious, I will sell couple of properties and finance my projects myself”. “Wise choice, for this period, indeed”. (This is why I was late in my arrival for the panel there, I came back to Romania Wednesday night and before leaving on Sunday I had finalized the first of the deals he wanted to do…)

All time classics