Re; Capital market still ailing despite strong economy, By Marta Ďurianová, Volume 12, Number 14, April 10- April 16, 2006
Mr Kopál has a good point. The Slovak economy lacks some fundamentals. The trouble is, of course, that many insurance companies in the country are foreign owned. They simply add Slovak premiums to their long-existing portfolios that are spread over traditional capital markets. Slovakia also does not harbour many private investors, or even individuals, who would like to see alternatives to a staightforward bank account. That's not even mentioning the lack of experienced and reputable brokers.
Many years ago, Ahold (supermarket chain Albert Heyn in Holland/Hypernova in Slovakia) offered customers a 10-cent stamp for every guilder spent. Sticking 490 of these stamps into a booklet got you 52 guilders, a return of over 6 %. The booklet could also be used to buy "units" of the "Loyal Client Fund", which invested half its value into Ahold shares and borrowed half at one percent over repo-rate. At its peak, the fund was worth over €800 million.
Unfortunately, the fund will soon be terminated due to Ahold's recent bookkeeping scandal, but my mother, who invested €6,400 into it over a 12-year period, will now receive €16,300, which is a cumulative interest of 8 % p a What makes this so interesting is that some €400 mio. was invested in Ahold shares by common folk who would never in their lives approach a broker. Such a scheme might work in a local Slovak grocery producer or retailer. The fund would have to yield at least a little higher interest than a common bank account of course, in order to attract public interest, but it would bypass the [maily foreign] banks and insurance companies, as well as divert some Slovak savings towards the local capital market.