BELGRADE (Serbia), June 25 (SeeNews) – The debut of Serbian oil monopoly NIS on the Belgrade Stock Exchange, BELEX, expected later this month may be whetting the appetite of some foreign investors but is unlikely to give a major impetus to lackluster trading volumes, local analysts said.
The shareholders of the oil company, which is controlled by Russia’s Gazprom, endorsed at an annual meeting held on Monday plans to transform it from a closed into an open joint stock company in a tune-up for its upcoming listing.
An open joint stock company has publicly traded shares that can be traded without the permission of other shareholders and can have an unlimited number of shareholders. Last year, Gazprom bought 51% of NIS from Serbia for 400 million euro ($492 million).
The move comes as daily BELEX trading volumes have slumped to below 1.0 million euro amid the global crisis. The bourse's combined turnover fell 19% on the year to 8.2 billion dinars ($96.9 million/78.9 million euro) through May, BELEX data showed.
Starting in January, 4.8 million Serbian citizens became eligible to withdraw an ownership certificate for five NIS shares each with total nominal value of 2,500 dinars. The Balkan country has a population of 7.0 million.
Three Belgrade-based analysts emailed the following statements to SeeNews:
NEBOJSA GRUJICIC, PARTNER AT BELGRADE-BASED SINTEZA ADVISORY
It is likely that NIS’s debut on the BELEX will spark moderate interest on the part of some foreign investors, but the problem is that the ownership of the company shares is very diluted so larger transactions will not be possible early on. Anything more than a token knock-on effect is unlikely.
I think that citizens will start to gradually dispose of their shares. The problem, again, is that we have a large number of small shareholders, so there will be technical obstacles to the quick sale of all shares.
The forecast is that the share price will be 500-800 dinars. The price is not expected to be below 500 dinars since the NIS majority shareholder is obliged to launch a takeover bid within two years of the privatisation at the price at which it bought the stake from the state and that was 4.8 euro per share.
UROS SPASENOVIC, BELGRADE-BASED BROKERAGE HOUSE BI BROKER
Given the current economic conditions, I don’t expect that NIS’s debut on the BELEX will have any considerable impact on the price movement of other companies on the bourse. The only certain positive effect will be the boost of current volumes. Any indirect, long-term effect may be greater interest of new investors to invest on the BELEX. I expect that a large number of citizens will immediately try to sell their shares.
The debut of NIS shares will probably have no effect on the price movement of other firms with a similar line of work. Lukoil and Nafta are the only other companies listed on BELEX with a business similar to that of NIS but neither of them is really actively traded.
There are two possibilities as far as the starting price is concerned. Customarily, the starting price is based on the accounting value of the shares as stated in the company’s latest financial report. The other possibility is that the company proposes a different price and the bourse accepts it. Given that the accounting value of a single NIS share, based on the financial report as of December 31, 2009, was 198 dinars, I expect that the starting price will be based on the proposal of the company, and amounting to 500 dinars per share, which is the price that Gazprom paid the government in Belgrade for the NIS stake.
The biggest advantage for NIS shareholders will be the establishing of an objective market share price, which is possible only on an organised market, such as the bourse, where they can sell their shares in an straightforward manner and at a minimal cost.
BELGRADE-BASED BROKER SPEAKING ON CONDITION OF ANONYMITY
NIS’s listing will, in any case, contribute to a more transparent trading which will ensure that a market price is set for smaller shareholders. This is only possible on a bourse where the maneuvers and speculative behaviour of some of the investors will be toned down.
In my opinion, the bigger pressure will be exerted on the citizens to sell their shares in the beginning. The media should sway them to sit back and wait for better times that lie ahead.
(1 euro=103.9854 Serbian dinars)