Serbian interest in trading on the stock market is growing

Published on 3. May 2023., News

People from Serbia are now investing more abroad, buying shares of renowned foreign companies on stock exchanges, from German to American. The shares of Bayer, Microsoft, Apple, Mercedes, Volkswagen, Siemens are also in the hands of our investors, without having to remove them from Serbia.
This is pointed out by financial broker Branislav Jorgić, who explained to Sputnik how trading on the stock market works, which is still a big unknown to most of our people.

How to invest in listed companies

In order for someone to join the stock market, it is necessary to choose a broker, conclude a contract with him, open a securities account and a cash account and set aside at least 5,000 euros. The commission that belongs to the broker usually amounts to 0.6 to 1.0 percent of the value of the transaction. Investors can invest both on the Serbian and international stock market, explains our interlocutor.

The founder and owner of the company “Jorgić Broker”, which was founded in 1992 as the first brokerage house in Yugoslavia at the time, specifies how it works:

“The contract is concluded between the person who wants to invest and the brokerage house and it regulates mutual relations, rights and obligations.” On the basis of that contract, a securities account is opened in the Central Register of Securities in Belgrade and the funds are deposited in the bank. When they agree on what and how to buy, which is always decided by the client, he issues an order for the quantity, the price at which he wants to buy something, and then the broker realizes it.”

When he wants to implement a specific transaction, the client issues an order, for example, for the purchase of 100 NIS shares at a price of 750 dinars. The broker takes it to the stock exchange, a transaction takes place, from which the broker is entitled to a commission of 0.6 to 1.0 percent of the value of the transaction, depending on how they agreed and indicated in the order.

Shopping on Wall Street from Serbia

He notes that investing in companies on foreign stock exchanges is also done through brokers in Serbia and explains that in that case a foreign currency account is opened in a bank as well as a securities account abroad.

“So, when a broker in Serbia gives an order for the purchase of foreign securities, the funds are withdrawn from the account here in Serbia. For the client, nothing happens abroad, although essentially everything is done abroad. In other words, the client has a contractual relationship with the broker in Serbia, regardless of the fact that the transactions are carried out abroad,” underlines Jorgić.
It Is important, he advises, that transactions are carried out through brokerage houses registered with our state authorities, i.e. with the Securities Commission, but also through banks that also perform these tasks.

Bypass Internet platforms

He points out that you should not accept investment offers through unknown internet trading platforms. They offer a large profit in a short period of time and there is a high probability that you will be cheated, notes our interlocutor.

In order to achieve a balance between risk and the amount of income, his advice is to invest only funds that do not threaten the daily or monthly liquidity of the investor. As he notes, this is best controlled by the investor determining from the income what he needs for current daily, monthly, and annual needs. What is left is the surplus that can be invested. In practice, he says, it used to happen that people were drawn in by some momentary high earnings, so they sold their flats and invested funds, and after that the prices of those shares fell, they made losses and were left with no flats and no money, Jorgić said.

Declining interest on the domestic market

When asked how much our people showed interest in this type of investment, especially since our stock market and the capital market are poorly developed, he says that more serious interest appeared in 2001-2002. Year, when the privatization started. Then there was a larger offer of securities of companies from the privatization and there was very lively trading that grew with good dynamics until 2008 and the world financial crisis.

“As a consequence of that crisis, there was a drop in interest in stock market investing on our domestic market, but also as a consequence of certain irregularities that happened with certain companies,” he says, illustrating it with the case of Agrobanka.

That bank, as he reminds, was very interesting for financing and according to all the financial reports that were certified by an independent auditor, and was also the subject of NBS control, it was shown that the bank is doing well. Investors bought shares of Agrobanka, it even went ahead with a new issue of securities and on that basis collected about 130 million euros from citizens.

It happened, however, that those reports were not correct, so the NBS practically overnight in 2011 introduced coercive measures in Agrobanka and the bank practically went into liquidation. There were other similar experiences with Univerzal Bank, Development Bank of Vojvodina, some companies, trading companies, he says.

Investing in foreign companies

“Taught by such a negative experience, domestic investors began to refrain from investing.” Simply, people were no longer ready to invest in such a somewhat chaotic capital market. It happened that people are now investing more and more abroad. This means that they buy shares of renowned foreign companies,” the experienced broker points out.

In addition, the thing is that, practically, at the moment, we do not have any offer of quality securities on our market, except for NIS, which is doing quite well and regularly pays dividends, notes Jorgić. In order for that market to develop, it is necessary, he believes, for there to be at least another dozen companies like NIS on the Belgrade Stock Exchange.

Mostly on the American and German stock exchanges

When asked where our people invest the most abroad, he says that it is primarily the American market because it is very liquid and there are a large number of renowned companies there, as well as the German one. When it comes to the profile of companies, he says there are no rules. At the moment, they are interested in oil, IT and pharmaceutical companies whose shares are bought by people from Serbia.

Our interlocutor notes that the temperament of the clients is different and that they most often find a balance between two extremes – conservative investing where they do not expect a large income but look for the security of their investment and younger investors who are more inclined to gamble. In order to make more profit, they are ready to take risks and be at a loss, Jorgić points out for Sputnik.

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