Wednesday, July 04, 2007

Slovenian Shares, Top World Performers, Cost More Than China's

Finally we have found a market that is more expansive than China. That makes the Chinese Market look cheap compared to ...... just "spinning" :-)

Hurra! Endlich haben wir einen Markt gefunden der noch teurer als der Chinesische ist. Im Vergleich zu Slowenien erscheit mir China geradezu als billig.... :-)

July 4 (Bloomberg) -- Slovenia's stock rally has made the equity market of the former Yugoslav republic more expensive than China's. Now investors say it's time to sell.

``Recent growth of the market is mainly based on speculation about consolidation and less on business results.''

The Slovene Stock Exchange Index, known as the SBI20, was the best-performing equity benchmark in the world last quarter, jumping 39 percent in dollar terms, according to data compiled by Bloomberg. It has more than quadrupled since the end of 2002

Companies in the index trade at an average of 38.9 times estimated earnings, more than twice as much as their average for the past year. The price-earnings ratio is also more than double that of the Morgan Stanley Capital International Emerging Markets Index, a global gauge for developing economies. Members of China's CSI 300 Index trade at 32.9 times earnings.

Slovenia, a country with 2 million people bordering Italy to the West, joined Europe's single currency in January, almost 16 years after declaring independence from the former Yugoslavia. Its $35 billion economy, about a fifth the size of Portugal's, expanded 7.2 percent in the first quarter, the fastest pace since 1999.

`Expensive and Illiquid'
The equity market has been fueled by money from government- owned pension funds, which hold most of their assets in domestic stocks. Local mutual funds also bought the stocks as Slovenians' savings rose along with the economy. Foreign investors hold about 5 percent of the shares.

``The market looks interesting, yet it is way too expensive and illiquid,'' said Peter Bodis, who manages $1.3 billion at Pioneer Investments in Vienna.

Phones, Oil
Not everyone is predicting the rally's end. Merger and acquisition speculation will continue to support shares, according to Sasa Mohorko, a stock broker at Slovenian brokerage and mutual fund Publikum d.d.

``I don't think the market is risky,'' Mohorko said. ``The second half of the year will be bullish as well.''

Petrol has jumped amid speculation the company may be taken over by Russia's OAO Lukoil, said Piotr Dzieciolowski, an analyst at UniCredit SpA's CA-IB unit in London. The two companies started an alliance last August.

The government says it plans to sell 39 percent of Telekom Slovenije d.d. next month. That has helped increase the share price of the national phone company by 55 percent in 2007. Intereuropa shares doubled this year on anticipation that the state will sell off its holding. Private ownership would make it easier for foreign businesses to take over companies in Slovenia.

Even so, none of the asset sales promised by Prime Minister Janez Jansa when he took power in December 2004 has so far come to pass.

Sale Blocked
The government in December blocked the sale of a controlling stake in Nova Ljubljanska Banka, Slovenia's largest lender, to KBC Group NV of Belgium, arguing it could endanger the country's ability to satisfy EU requirements for banking stability.

``We're not adding any more Slovenian shares,'' said Uros Svete, director of asset management at Kapitalska Druzba, the government-controlled pension fund in Ljubljana. He said the fund is investing in shares in Croatia, Serbia, Macedonia and Romania and in the foreign exchange market to seek better returns for retirees.

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Anonymous edgar said...

Wow, the high P/E based on growth expectations sounds like China, whereas the government pension funds buying stock sounds like a US corporate fascist heaven sent dream right here on earth. I'm sure they'll be fine as long as the central banks keep shoving money into every nook and cranny of their friend's pockets. Ha!

10:18 PM  
Blogger jmf said...

Moin Edgar,

they should learn from Norway

Their $300 billion oil funds must invest outside from Norway to prevent such excess.

On top of this the investment must hit ethic criteria (no investments in bad corporate government, no war related investments etc)

11:44 PM  
Blogger jmf said...

Shanghai Composite Index ends 5.3% lower at 3,615.87

SBI in the green......

1:15 AM  
Anonymous edgar said...

-5.3% ? That's gotta hurt.

9:14 AM  

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