The Belgrade Stock Exchange has just celebrated two anniversaries – 125 years of existence and 30 years of renewal – and its director Sinisa Krneta says that 125 years of existence is a reminder of the institution, bearing in mind that, with the National Bank of Serbia, it is the oldest testimony of the Serbian economic history. And not just economic ones. At the same time, this anniversary is a great reminder. Namely, the stock market in Serbia has not yet become part of the national economic equation in which the locomotive of economic development could and should be, writes Politika.
What is the turnover on the stock market? How much smaller than in the golden period?
If you allude that the golden period of the Belgrade Stock Exchange was the one from 2001 to 2007, I could say that we are talking about an illusion that was then unreasonably created; Namely, the stock market has not been used in its primary mission until then or since: as a mechanism providing capital raising for financing the growth and development of companies, investing in innovation and playing the market more successfully, both domestically and internationally. It should be remembered that no privatization in Serbia was carried out by an initial public offering (IPO), so it is not surprising that the private sector avoids the role of icebreaker.
Why do businesses avoid the stock market? Last year was the first initial offer of shares of one company, it was announced that the fundraising was successful, so why did not others go in its way? What are the effects of such an IPO where turnover is more than minor?
From the beginning of the Serbian transition to a market economy in 2001 to the present, only one company has come to the Belgrade Stock Exchange by its will. It was it who in 2018, after 78 years, conducted the first initial public offering of shares (Fintel energy) in Serbia. The remaining 2,800 companies, identified through the Exchange, emerged through the force of privatization regulations, with minority packages, where the stock exchange served as a mechanism for additional consolidation of ownership, which gave it the role of absorber of mostly bitter emotions. Except for Belgrade, no Serbian company, public or private, has in the meantime debuted on any other stock exchange in the region or anywhere in the world. That says a lot. A project we recently implemented with the EBRD Serbia: IPO Go, confirmed the depth and complexity of the problem that the Belgrade Stock Exchange has been dealing with most often in the last 19 years. Namely, Serbian private companies perceive bank credit as an almost unique source of external financing. Furthermore, for these companies, giving up part of the ownership for the sake of raising capital is generally not an option for the owners, so business hazard seems more enticing. Also, commercial banks have so far considered the capital market to be a largely competitive part of the financial market they absolutely dominate, and without their leadership, entering the capital market for companies is inappropriately difficult, almost impossible. In the end, almost all eyes are on a country that is expected to break the big market capitalization, which would iron out any possible unevenness of mostly unused regulations and, with its quality, would then attract the missing institutional investors. Last year’s IPO was not of such a tectonic power that, as a solitary and isolated case, would itself change the systemic environment. It is more a confirmation of the owner’s ability, courage, vision and courage, and as it is, is a historic achievement that we are professionally proud of.
This year Soyaprotein left the Belex15 basket and now there are only 10 stocks in that basket. Is it possible to stop the dropout of the best companies in this benchmark?
Soyaprotein not only left the index basket, but the stock market completely. It is another guild exposed to the stock market as a consequence of the concept of privatization, a regulatory environment that favors the ultimate consolidation of ownership and the consequent abandonment of the market. It is just one in a long line of companies that have gone the way they came: without a strategic intention to use capital market mechanisms to finance their business strategy. The Belgrade Stock Exchange is making extraordinary efforts to keep its indexes active, however challenging. Unfortunately, without new companies on the market, this process has its own, now well-established path.
The Zagreb Stock Exchange took over the Ljubljana Stock Exchange a few years ago, and this week entered the ownership structure of the Macedonian Stock Exchange. Would a foreign strategic partner contribute to market development?
Equity consolidations of the largest stock exchanges around the world have been a reality for over a decade. The benefits of such synergies have spilled over into our part of the world, first into central, and now into Southeast Europe. Understandably, since we are talking about business, it is about marriage of interest. From here, at the moment, appreciating the condition and form of the Serbian capital market, it is not realistic to expect that the Belgrade Stock Exchange could intrigue partners for a business-interest marriage. The stock market is already preparing alternative solutions for the time when it will finally have a growing dowry.
