"If they manage to put these stocks on, especially that of SPP, then that will be at least a small light at the end of the tunnel for the market."
Ivan Chodák, equity analyst at CAIB Securities.
The Slovak capital market in 2000 was once more characterised by its lack of activity. As one of the smallest bourses in central Europe, having a capitalisation of only $3 billion, the Bratislava Stock Exchange (BSE) saw little change in the general apathy in trading in 2000, and is unlikely, analysts say, to see anything different in 2001.
"In 2001 we'll see a flat market. Flat in terms of liquidity and investor activity," said Ivan Chodák, equity analyst at CAIB Securities. "The key drivers for the market will be new issues and what is done with privatisation."
The government has said that it wants to put part of its stake up for sale in state companies on capital markets, either solely internationally or partly on the BSE.
A 36% state stake in mobile phone operator Globtel will go on stock markets, possibly in Slovakia, while part of the 49% stakes in gas distribution company Slovenský plynárenský priemysel (SPP) and pipeline operator Transpetrol. If the shares do go on the Bratislava bourse it may generate enough activity to begin attracting speculative trading.
"If they manage to put these stocks on, especially that of SPP, then that will be at least a small light at the end of the tunnel for the market. It would definitely be a driver for the market," added Chodák.
One bright spot for the capital markets comes with last year's creation of a financial markets watchdog - the Financial Markets Authority - that will oversee both the capital markets and eventually the banking sector. The body will hopefully fully implement the new Securities Act, passed last year, which will see a fully-regulated and more transparent market.
The law lays down strict conditions for which companies' shares are tradeable on the exchange, and stipulates that companies with listed shares must disclose all relevant financial information. Those companies which choose not to disclose all information will not be eligible for trade on the market.
"This will really sort out the stock exchange and shed a clear light on it. We'll see what companies are left listed, which ones want to stay on the listed market," said Chodák. "Unfortunately though, I'm not that optimistic of the numbers that will be left," he added.
Ultimately though, the problems that have dogged the Slovak capital market in recent years look set to remain.
"The difficulties will still be there, specifically with the low liquidity of the market," said Chodák.
"The problems aren't with what companies are there [on the market] but with the general feeling for the market. There is still that need for drivers, something to move the market on, and the key drivers will have to be new issues.
"The issues that are traded most, Všeobecná úverová banka (VÚB), Transpetrol, and Východoslovenské železiarne (VSŽ), are all firms which have been consolidated.
"If SPP or other new shares can get on the market then we may see a significant change [in the market mood] next year."
The sad fact for the market, some experts say, is that SPP is unlikely to get on the market in 2001 at all.
"As for SPP, even if the sale advisor and the government decide on floating the issue partially on the capital market, that is very unlikely to happen this year.
The process would take a longer time [than a direct sale] and the government might just decide to sell the entire 49% straight to a strategic investor to secure quick funds to back repayment of outstanding National Property Fund (FNM) bonds," added Pavel Habšuda, analyst at Slávia Capital brokerage house.
