The Driving Force for the Slovenian Capital Market
Interview: Andrej Šketa, president of the board, LJSE
What are the advantages of operating within CEESEG?
Our mission is to integrate the supply and demand of investors with the needs of companies seeking capital for their development projects. We believe that in the context of regional cooperation we can all achieve much more by working together rather than working on our own. CEESEG represents the largest capital market in Central and Eastern Europe with a market capitalisation of EUR 160 billion and a monthly turnover of EUR 12 billion, which represents more than half of the total turnover in shares in the region. A total of 69 international and 113 local financial agents operate within the CEESEG market.
What are the most important products at the LJSE?
Shares of all major Slovenian companies are listed on the LJSE. These include Krka, Gorenje, Mercator, Petrol, Telekom, NKBM bank from Maribor, Luka Koper and 65 others. They come from a variety of interesting industries: pharmaceuticals, trade, telecommunications, finance, energy, appliance manufacturers and others. Companies from the Prime market operate internationally, and some of them achieve more than 90 percent of their revenue outside of Slovenia. Because of their dynamic development, Slovenian companies are comparable with other foreign companies within their respective industries, and also outdoing them on many indicators. The total market capitalisation of the stock market of EUR 6.6 billion achieves 18 percent of Slovenian GDP.
To what extent is the LJSE already included in international capital flows?
In 2010 the share of foreign investors in blue-chips turnover was 43 percent and in the future we expect that their presence will be even greater. At the end of 2010, we introduced a successful international trading platform Xetra, which is used by Deutsche Boers in Frankfurt. In the first few months after the introduction of Xetra we acquired new members on the market - three international investment banks - and more are expected in the future. Information on Slovenian companies and their shares is available to international investors via a number of financial information providers, including major firms Thompson Reuters, Bloomberg and Teletrade, which means that the information is available to over 30,000 professional investors.
Where do LJSE's most important investors come from and what are they most interested in?
The share of international investors in the ownership of Slovenian companies is growing steadily. Due to the method of privatisation, domestic investors were most important in the past and together with the state they still account for a majority stake in the ownership of Slovenian companies. In recent years, the greatest interest from foreign institutional investors seeking investments in emerging markets has come mainly from the USA, Scandinavia and the United Kingdom. Foreign investors (funds) are mainly looking for future business growth, since they anticipate that the growth will subsequently be followed by an increased value of these companies. Those successful Slovenian companies that attract most interest are the same as elsewhere in Europe - those that boast a good free cash flow and high dividend yield.
Can we continue to expect new products or shares on the market?
The dynamic development of the Slovenian economy will continue and the most successful Slovenian companies will fund part of their development through their equity, raised via the stock market. The government has already indicated further progress on privatisation. Domestic and international investors should be offered part of the state capital in major Slovenian companies and even banks. The Stock Exchange and CEESEG group have all the necessary infrastructure to support these upcoming activities.