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SBCP must expand to boost capital market

ALTHOUGH experts do not expect that the new Slovak stock exchange, Slovenská Burza Cenných Papierov (SBCP), will boost the stagnant capital market, SBCP's representatives said they would try to bring more life to the trading floor.
SBCP is planning to develop its services this year and provide its members with a connection to the bigger foreign capital markets abroad with the aim to provoking more vivid trading. Currently there is little possibility for this kind of trading in Slovakia.
"There are only two ways to try and boost the capital market in Slovakia, throw new items on the market or connect the stock exchange with foreign markets," said Darina Huttová, SBCP's general director.

ALTHOUGH experts do not expect that the new Slovak stock exchange, Slovenská Burza Cenných Papierov (SBCP), will boost the stagnant capital market, SBCP's representatives said they would try to bring more life to the trading floor.

SBCP is planning to develop its services this year and provide its members with a connection to the bigger foreign capital markets abroad with the aim to provoking more vivid trading. Currently there is little possibility for this kind of trading in Slovakia.

"There are only two ways to try and boost the capital market in Slovakia, throw new items on the market or connect the stock exchange with foreign markets," said Darina Huttová, SBCP's general director.

There are two scenarios which include connecting SBCP with capital markets through the Vienna-based Newex stock exchange or a creating a stock exchange for the Visegrad Group(V4) countries including Slovakia, Czech Republic, Hungary and Poland.

However, due to insufficient interest for trading among V4 countries, experts suggest that the first option is much more likely to happen.

"The most realistic was installation of access to the foreign markets through Vienna stock exchange," Huttová said.

Slovakia has suffered from the lack of trading activity on its capital market. The government had promised to put minority stakes into such sweets as the gas utility SPP, crude oil transporter Transpetrol and mobile phone operator Globtel on the stock exchange to revive it. Hovever, the promise was never met.

As a result another Slovak stock exchange, Burza Cenných Papierov Bratislava (BCPB), reports a market capitalisation of $3 billion, $47 billion less than the Prague Stock Exchange.

Experts say that in the near future there is little chance for SBCP to record better results than BCPB and therefore it is logical to allow connections with foreign markets.

"This would increase added value to their services. To allow the connection with the foreign markets would be interesting for the subjects which are too small to create the direct contact with the broker abroad. It might not be so necessary for larger entities such as banks who use foreign brokers of their shareholders," said Michal Holík, chief trader at J&T Securities.

However he added that the connection between the SBCP and foreign markets would be interactive so it may prompt international traders to start investing in Slovakia.

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