Ljubljana Stock Exchange Monthly Report - August

On 10 August, after a period of four months, the SBI index again exceeded the level of 1,806 points and even reached 1,922 points by the end of August. Shares of close end investment funds recorded a strong growth as well in August as their PIX index reached the highest value since the Exchange started calculating it. On 27 August it rose to 1,426 and at the end of August decreased only slightly to 1,289. With a total of SIT 17.8 billion, the turnover on the Exchange was considerably higher in August than in July, when it amounted to SIT 10 billion. On 2 August, after a temporary suspension (which started on 9 July 1999) due to a split share of PIDs in KDD, trading in shares of all PIDs was resumed, or with those parts of their shares, which represent real assets (the already used ownership vouchers). Since at least one trade had to be concluded with each share of the 20 authorised investment companies included in the PIX index for the calculation to be correct, the Exchange started publishing the PIX index again two days later - on 4 August. At the forefront of stock market events in August was Merkur's announcement of a takeover bid for shares of Kovinotehna, also due to the fact that both shares are listed on the Exchange. The reaction of Kovinotehna's management board has since been negative, while on 23 August Merkur increased its original offer from SIT 750 to SIT 930 per share. On 24 August 1999 the Exchange's Management Board resolved to admit to trading on the free market the last three PIDs. They are the close end investment funds Plod d.d., Trgatev d.d. and Setev d.d., managed by the management company HRAM, Ljubljana. The trading date will be set after the first pages of their prospectuses have been published, after which all 46 authorised investment companies will be trading on the Exchange. On Friday, 27 August Merkur announced that its offer to buy 53.15 per cent of Kovinotehna's shares had been finalised, however, the takeover will be deemed successful only after being approved by the Office for Protection of the Competition and by the Government. The new bylaws of the Foreign Exchange Act entered into force on 1 September and their impact on future trading on the Exchange should be seen shortly. Different speculations exist in this respect, since relaxation of restrictions refers to foreign as well as domestic portfolio investors. From 1 September onwards Slovenes may invest in foreign securities, and restrictions for foreign portfolio investments have been relaxed: the Bank of Slovenia has reduced the time limit for foreign investors from four to one year and lowered the annual charge for such investments ( from 10.38 per cent to 2.83 per cent of the amount invested in Slovene shares and bonds). It is expected that the listing on the official markets will expand and the number of companies traded on the free market will grow considerably after the last joint-stock companies, deriving from privatisation, have been registered with KDD this autumn.