What to Expect from the Bulgarian Capital Market in 2018
For the Bulgarian Stock Exchange (BSE-Sofia), 2017 was better than the previous two years, which were marked by extremely low liquidity. The number of trades grew by 40% and traded volumes of shares rose almost 80%. The main index SOFIX retained a two-digit annual growth of 13.4% compared to the previous year. Public companies distributed BGN 260 million to shareholders, an increase of 70% compared to 2016.
According to investors, the most serious problem facing the BSE continues to be the low liquidity. According to data from the exchange, central bank BNB and analysts, the number of shareholders in Bulgarian companies has generally declined in recent years. Bulgarian investors prefer shares with an annual dividend distribution, as they provide a fixed, tax-free, stable income, besides the possibility of a capital gain. The investors are people with a monthly income of more than BGN 3,000, most of whom are programmers. Regarding stock trading skills, most of them mainly rely on specialized literature and official data from the companies which they themselves study, as well as rely on their own intuition and experience according to the data of the analysis Investors Profile on BSE 2017, available here.
The management of BSE-Sofia expects last year’s positive trend to continue in 2018 in view of the growing forecasts for the Bulgarian economy for this and next year. BSE would like to provide simplified procedures for closing the deals as well as adequate analyses of the listed companies, and to participate in international platforms to support decision making in stock trading and attract investments, as a priority, from foreign investors, whose interest is weakly motivated by the stock exchange and the Bulgarian companies. Long-term international investors are missing, while Bulgarian investors have small resources to influence and succeed in driving and accelerating the trade.
The institutions’ commitment to the capital market situation is expected to have a positive effect, too. A concrete step in this direction is the forthcoming start of a procedure for providing vouchers for small and medium-sized enterprises. This is a program by the Ministry of Economy aimed at helping companies to enter the capital market and thus gain the opportunity to raise additional funds on the basis of their real development potential, evaluated by independent investors. It is expected that their transformation into public companies will have a positive effect on the optimization of their operational processes as well. The total value of financial support in the form of vouchers is BGN 4 million and is funded under Operational Program “Innovation and Competitiveness” 2014-2020 (OPIC). The individual vouchers will amount to BGN 50,000 and will cover services for the preparation of the issue of securities and an initial public offering on the stock exchange.
The BSE-Sofia will hold its first meeting with investors for this year on January 30. Three more similar meetings are scheduled within the year. If you are interested, you can follow them in the corporate calendar of the stock exchange, all dates have already been announced on the company’s website here.
Several more useful links:
Number of shareholders in stock exchange-listed companies – data of the Central Depository /published since May2017/.
Dynamic ranking of the leading Bulgarian companies on the stock exchange.
Detailed comment about 2017 by BSE Executive Director Ivan Takev in an interview.
The BSE’s Investor Profile of 2017, analysis and all results.
