During the whole year of 1998 the Slovak capital market was experiencing prevailing low liquidity and the stock exchange share index SAX in substance did not reflect the situation on the market and has fallen under the psychological limit of 100 points.

The situation has turned in favor of bonds, mainly state bonds. The shares were nearly not traded on the floor and were transferred mainly in direct transactions. State bonds, thanks to the high yields became the most advantageous investment on the market, because the shares did not offer such yields and their issuers mostly did not pay out any dividends. Even the issues of stable companies such as Slovakofarma, a.s. Hlohovec, Slovnaft, a.s. Bratislava, and SES, a.s. Tlmace showed low liquidity. The Asian and Russian crises effected all emerging markets in a form of rapid decrease in prices. Also the Polish and Hungarian markets recorded large traded volumes and the prices were going down, while in Slovakia the prices were falling also for low volumes. For our capital market it did not help either that there was an absolute shortage of foreign investors, the rating of the country was lowered, fights for majority in significant companies, and several causes related to privatization. Development of the Slovak capital market will depend also on the integration process into the EU, as this institution is inevitable for the expansion of large Slovak companies, regardless who is their owner. What could help is the exchange of NPF bonds for the shares of strategic companies (Slovak Telecom, Slovak power utility, and banks). Amendment to the legislation is also necessary to increase protection of investors through the amendment of the Act on securities and amendment of the Commercial Code.

Slovak Trade FORUM