RSM Romania_Business Brief_25-29.07.2016

More documents

Recommendations

Info

MACRO • Reduced confidence in the economy The CFA Romania macroeconomic confidence index fell by 7.3 points to 58.5 points in June. The current conditions index was 71.6 points, down 5.5 points, and the expectations index fell 8.3 points to 51.9 points, the lowest level since November 2014. The expected Euro/Lei exchange rate for the next six months was 4.5500 (an increase of 500 pips), and the twelvemonth forecast was 4.5375, an increase of 375 pips. The expected inflation over the next twelve months (July 2016-July 2017) was 2.00%, an increase of 0.55% on the previous financial period. CFA Romania launched its Macroeconomic Confidence Index in May 2011. Polling is conducted among financial analysts at the end of each week. The index, between 0 (complete and utter lack of any confidence whatsoever) and 100 (full and unflinching confidence in the Romanian economy), is calculated based on six questions relating to current business and labour market conditions and expectations regarding the business sector, labour market, personal income, and personal wealth. The poll also gauges expectations as to the rate of inflation, interest rates, exchange rates, global macroeconomic conditions, and oil prices over the next twelve months. CFA Romania is an association of investment professionals, most of whom hold the title of Chartered Financial Analyst (CFA), a qualification administered by CFA Institute USA. CFA Romania currently has one hundred and eighty members. • More home loans in June The banks granted more mortgages in June than in the previous month, although many of them have tightened lending conditions since the Commissioning Payments Law came into force on 13 May. The amount of home loans increased by almost a billion lei in June, reaching 55.6 billion lei. The banks also benefited from state guarantees in the First Home programme in June, after the government allocated a ceiling of five hundred million lei, which, however, was quickly used up. For the banks at the top of the league in terms of assets, First Home now accounts for ninety per cent of their new mortgage portfolios. Six in ten loans are First Home loans. Such loans, with an advance payment of just five per cent, are excluded from the Commissioning Payments Law. For standard loans, the banks have increased the advance borrowers are required to pay from an average of fifteen per cent to between twenty and thirty-five per cent. Since the beginning of the year, home loans have increased by 3.7 billion lei to 24.4 billion lei, while foreign currency home loans decreased by two billion lei to 31.2 billion lei. This rate of growth will be viable only if the government allocates further First Home guarantees. • Austrian investors demand “friendly” policies Around seventy per cent of Austrian investors in Romania are satisfied with conditions here, and forty-four per cent have plans to make investments in the next two years, but they are pessimistic as to the future and demand “a friendly economic policy towards entrepreneurs” political stability, transparency, less bureaucracy, and more professional training, according to a study carried out by the Austrian Embassy. Austrian companies have invested 9.7 billion Euros in Romania, equivalent to 16.1% of total direct foreign investments in Romania. The more than seven thousand companies with Austrian capital in Romania employ more than one hundred thousand people. The main Austrian investors in Romania are OMV, Erste, Raiffeisen, Holzindustrie Schweighoffer, Vienna Insurance Group, Uniqa, and Grawe. • Romania/E.U. – six-month balance sheet in the black In the first six months of 2016, Romania received 3.9 billion Euros from the E.U. and contributed 700 million Euros to the E.U. budget, giving a positive balance of 3.2 billion Euros. Of the funds received from the E.U. in the first six months of this year, 2.4 billion Euros were structural funds, 631 million Euros rural and fisheries development funds, 496 million Euros agricultural subsidies, and 285 million Euros in the category of “other sums.” In order to achieve budget absorption, it is essential that the State be the main beneficiary of E.U. funds, with money going on major infrastructure projects: motorways, railways, the environment. At the end of June 2016 the total structural funds obtained from the E.U. for the 2007-2013 period was 13 billion THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING
MACRO • Euros (11.2 billion Euros in December 2015), with the rate of absorption climbing to 69% of the total 19 billion Euros allocated. Since integration in 2007, Romania has received 37.4 billion Euros from the E.U. and contributed 13 billion Euros, resulting in a positive balance of 24.5 billion Euros, or 15.5% of GDP for 2015. Sources: Wall-Street, Ziarul Financiar, Adevărul, Agerpres, Profit.ro BUSINESS Carpatica Asig to go bust The Board of the Financial Supervisory Authority has decided the fate of the insurance company owned by millionaire Ilie Carabulea, which is to be declared bankrupt, given that the Deloitte report also shows that liquidation will be 150 million lei cheaper than continuation of the resolution stage. According to the said report, the Insurance Guarantee Fund will have to spend around 650 million lei to compensate Carpatica Asig clients and their third-party claimants. The scale of the Carpatica Asig bankruptcy is a lot smaller than that of Astra Asigurări, however, which might suggest that the Deloitte estimates are exaggerated. Carpatica Asig is said to have 26,000 damages cases, each with an average value of 1,500 Euros. In contrast, Astra had more than 57,000 cases when it went bankrupt. Almost all the Carpatica cases are RCA policies, whereas Astra also handled complex maritime and aviation cases. Carpatica is the third insurance company to go bust in the last two years, after Astra and Forte. • SecureWorks rents 3,000 square metres in AFI Park 4&5 SecureWorks, a supplier of computer security services, has rented around three thousand square metres of office space in AFI Park 4&5. With 32,000 square metres of office space, AFI Park 4&5 is now seventy per cent occupied by multinational companies, including Cameron, SII Romania, ORTEC Central & Eastern Europe, FotoNation (a Tessera company), and VEEAM Software. The new tenant, SecureWorks, has a portfolio of more than 4,300 clients in fifty-nine countries. • Swiss trader Repower sells its Romanian business Swiss energy trader Repower, which has a market share of more than five per cent in Romania in the small- and medium-sized businesses sector, supplying electricity and gas to clients include Mega Image, Nestlé, Ford, McDonald’s and Carrefour, is selling its Romanian business to MET Group, another Swiss company. The transfer will be concluded in September. MET is present in ten European countries. In May, Repower, announced that low prices on international markets, as well as an unfavourable exchange rate had led to poor results in the 2015 financial year, with an operating profit (EBIT) of -69 million Swiss francs and a net loss of 136 million. • 24 companies to receive state aid to create new jobs More than twenty companies are to receive state regional development aid to create jobs. The total sum of the aid is more than 100 million lei. Thirty-three companies applied for aid, promising to create around five thousand new jobs, and twenty-three applications were successful. The largest sum is to be received by Webhelp Romania, a call centre that undertook to recruit around 460 staff if it received state aid of 16.9 million lei. Vehicle parts producer Yazaki applied for 15 million lei and will create more than 800 jobs at its factory in Brăila. Other successful applications were made by UPC, a cable company that is part of U.S. giant Liberty Global, which has set up two new companies for this purpose: UPC Services and UPC External Services. Also successful was Flying Trade Group, a British outfit that is to open a frozen food factory in Bihor, receiving 6.9 million lei in aid and recruiting 244 staff. • Impact of Ahold-Delhaize merger on Mega Image operations in Romania The international merger of Belgian company Delhaize and Dutch company Ahold will not have any significant impact on Mega Image operations in Romania. The visual identity of Mega Image, owned by the Belgian retail giant, will remain unchanged, but it is possible that investments might increase as a result of the merger, which will create a twenty-two-brand retail giant with 6,500 shops in eleven countries. Mega Image, which has 482 shops and a turnover of more than 3.5 billion lei, will retain its strong local identity. THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING
Page 1: THE POWER OF BEING UNDERSTOOD AUDIT

RSM Romania_Business Brief_25-29.07.2016

Create successful ePaper yourself

Delete template?

Save as template?