The fall puts the index firmly in correction territory, conventionally defined as a decline of more than 10% from a recent peak, Cursdeguvernare.ro reported.
Romania’s market appears particularly sensitive to domestic political developments, and the current correction suggests that investor sentiment has eventually turned more cautious after months of political deadlock. Investors are also watching the upcoming review by S&P Global Ratings, scheduled for October 2, amid concerns over Romania’s fiscal position and the absence of a full-fledged government.
On a medium-term horizon, a further decline of around 20% from the August peak appears possible, and it would bring the market into bear-market territory, conventionally defined as a decline of at least 20% from a recent high.
The correction comes after a massive rally over approximately 18 months and against a backdrop of renewed turbulence on international markets. Higher oil prices linked to the escalation of the conflict in the Middle East have revived concerns about inflation and complicated investors’ expectations for the monetary policy of major central banks.
The September correction therefore reflects a combination of profit-taking after the prolonged rally, domestic political and fiscal uncertainty, and a less favourable global backdrop.
Recent Romanian market commentary has likewise pointed to persistent inflation, higher fuel prices and the lack of a full-fledged government as factors weighing on sentiment.
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