INTERVIEW – Profit Outlook Seems Uncertain on Slovenian Bourse in Coming Months - KD Brokerage

“I doubt that in the next few months we can expect the profits we have had in the past,” KD BPD board chairman Benjamin Josar told SeeNews on the sidelines of the 2nd Southeast Europe Financial Services Forum organised by SeeNews in Bulgarian capital Sofia earlier this month.

Shadowing steep losses on global markets, the blue-chip SBITOP index and the broader SBI20 index of the LJSE have lost some 64-65% each since the end of last year. In 2007 the indices gained 68% and 74%, respectively. Analysts have said the market reached unjustified values last year boosted by high investor expectations for privatisation and takeover speculation.

“Valuations are now more favourable but not sensationally favourable,” Josar said, adding that buying at current prices on the bourse in Ljubljana will make purchases not rewarding in the short term but maybe in the long run.

“Such conditions offer opportunities for those that are braver and [...] have a strategy ready,” Josar said.

He added previous experience shows that in cases of crisis yields are above the average in the long term, which is a period of several years.

Local investors dominate the Slovenian capital market. Foreign investors are mostly interested in blue chips, mainly drug maker Krka, Josar said.

“I share the opinion that 2009 will be a very demanding year but after that the whole situation will change,” Josar said, adding that for the economy 2009 will be more difficult than 2008, but then the picture will slowly change.

“What is positive is that financial markets react most quickly […] a recovery will be felt first on the stock market and after that the economy will follow,” Josar said.

Asked whether LJSE will see a recovery in 2009, he answered: “I don’t know.”

Along with movements on global markets, another factor that will impact trends on the LJSE next year will be the state of the local economy and companies, Josar said. For the time being the main problems local companies face are harder access to lending and dwindling demand for their products.

Josar expects tougher conditions for doing business to facilitate consolidation among brokerage houses in Slovenia.

“In the past we have seen some brokerage houses being acquired by others. I think that this trend will continue,” he added.

KD BPD, part of Ljubljana-based KD Group, will be transformed into KD Banka in early 2009, KD Group said earlier this month.