ZAGREB (Croatia), February 1 (SeeNews) – Foreign investors would like to see Serbia as pro-European and consider incumbent President Boris Tadic a far better option then his nationalist rival Tomislav Nikolic in the presidential run-off vote on Sunday, a foreign fund manager said.
"I think that in the eyes of investors Nikolic will be a poor choice," Miroslav Jelicic- Purko, board member of Croatian fund manager Aureus Invest, said. "We perceive a European orientation as vital for Serbia and given that a certain fear still exists among foreign investors, the pick of Nikolic as the country’s president could jeopardise the inflow of capital," he said.
"The political rhetoric of Nikolic could create uncertainty on the market," the fund manager added.
Pro-Western Tadic is seen with a slender lead over Nikolic in the voting on Sunday, according to a poll this week. Nikolic led by nearly five percent in the first round, held on January 20 when he won almost 40% of the votes cast, versus some 35% for Tadic.
While the position of president is largely ceremonial, some political analysts consider this vote important, as a victory for Nikolic is seen as the way back to Serbia's turbulent nationalist past, while reformist Tadic is expected to keep the ex-Yugoslav country on track for building closer ties with the European Union.
The EU initialed a Stabilisation and Association Agreement (SAA) with Serbia in November last year and Serbia hopes to attain candidate status by the end of 2008. The SAA is a contractual agreement with the EU, which examines the legal, economic, industrial and social reforms that the country will have to introduce to meet European standards and create a free trade area. The EU also provides technical and financial support to help the partner country implement the agreement.
"Tadic is a much more favorable option, for the sake of political stability but another question is how will the president position himself and what will be his power," Jelicic said.
The choice of the next president is also related to another big problem in Serbia, the status of Kosovo. Ethnic Albanians, who make up 90% of the population of this U.N.-run southern Serbian province, are insisting on independence, which is staunchly opposed by Belgrade.
"Most European countries consider that Kosovo should become independent and that problem will be quickly solved if Tadic is chosen, while with Serbia headed by Nikolic, that process could be prolonged," Jelicic said.
"I believe that with Tadic as president, Serbia, which has recently launched voucher privatisation, will carry out this process along with the country’s other economic reforms, much faster," he said. And again, another question is how successful will Serbia be in these processes, given that it is a relatively young country burdened with a socialist past.
Jelicic declined to give any forecast for the expected performances of the markets in southeastern Europe to avoid possible misinterpretations that could be seen as conflict of interest. Aureus Invest invests across the former Yugoslav countries. Its equity fund was the most successful Croatian fund in 2006 with an almost 69% annual return.
"All markets have room to grow but in the context of a possible U.S. recession and global economic slowdown, the fundamental approach towards companies’ becomes questionable," he said, adding that now the market puts under the magnifying glass every piece of negative news flow.
All the markets of former Yugoslav countries are very small and fragmented. Most quality investors would not even consider making investments in this region if they were not settled both legally and politically. "These markets have no chance [to attract serious investors] until politicians realise this," he added.
Mostly Croatian and Slovenian investors put their money on the volatile equity market of Serbia as they know the situation in the country, rather than investors who are not from the region.
"Our region has always been seen as relatively stable in our own eyes, and unstable in the eyes of others," he said.
The main Belex share index of the Belgrade stock exchange has lost some 5.0% since the beginning of the year.
The political uncertainty in Serbia has impacted share prices there and intensified the drops caused by panic on global markets earlier this year, Jelicic said. However, the political factors were not decisive and within the region, the global woes hit to the largest extent the value of Slovenian mutual funds, although Slovenia is politically the most stable part of the former Yugoslavia, he said. In his view, the second most stable is Croatia, followed by Montenegro, Macedonia, Bosnia and Serbia.
"The solution of every problem will positively affect the markets of these countries but instead of solutions to these problems we see them deepening," he said, referring to Kosovo and war-divided Bosnia.