Dealers at the Bratislava Stock Exchange (BSE), during the late October storm on the world's major stock-exchanges, napped through the turmoil as Slovakia's stock market stayed its course, stuck in the mud. Most market analysts said that Slovakia missed the wrath of the world storm due to the absence of foreign investors and a lack of long-term liquidity.
The BSE's 16-share SAX index eased just 2.71 points at the beginning of the tumultuous week, but analysts didn't link that fall to the worldwide downturn.
"The Slovak capital market has been following its own track for a long time, showing little sensitivity to fluctuations on world markets," said Miron Zelina, an analyst at Invest Brokers. "I see the main reason for this in the significant lack of foreign funds on the BSE," he said, adding that this prevented the global domino-effect of withdrawal of capital from happening on the BSE.
While other markets in the region, including the neighboring Czech and Hungarian, saw a flight of foreign investors over the week resulting in a fall in most indices, prices of Slovak blue chips remained relatively stable.
"Some of the few foreign players [on the BSE] even feel themselves slightly cheated as they had speculated on a price decline similar to that on other markets," said Libor Briška of Creditanstalt.
The Slovak market has long suffered from a severe lack of liquidity with traders complaining about the reluctance of domestic companies to enter the market with new share issues.
With a market capitalization of only $900 million, Bratislava's bourse has always been overshadowed by its bigger sisters in Prague ($5.0 billion) Warsaw ($4.6 billion) and Budapest ($3.5 billion).
To make matters worse, investors have been spooked since last spring, when they were gripped by a perceived weakness in the Slovak currency . The crown has been under downward pressure since late May.
"[The investors] could not withdraw funds from the BSE simply because they're not here," Briška said. "This might be cited as one of the sad realities of our market," he added.
