Foreign floors fancy a bit of the bourse
As speculation surrounding the future of the Warsaw Stock Exchange (WSE) continues to mount, a consortium of the Budapest and Vienna bourses has announced it is gunning for its ownership.
While both the WSE's management and the government have frequently come under fire for allegedly dragging their feet over the privatization of the stock exchange, the process seems to be gathering momentum, with the Budapest Stock Exchange becoming the latest to announce that the WSE is on its radar screens.
"We have recently held talks with [WSE] President [Wiesław] Rozłucki," says Attila Szalay-Berzeviczy, CEO of the Budapest bourse, although he adds, "But they were of a very preliminary nature and no specific decisions have been taken."
He also reveals that the Budapest exchange, whose largest shareholders are Germany's HVB Bank and the Vienna stock exchange, is gearing up for regional consolidation, something that is likely to be led by banks.
And while Szalay-Berzeviczy's remarks prompted Euronext, an alliance of the Paris, Amsterdam, Brussels and Lisbon bourses, to reconfirm its interest in acquiring the Warsaw floor, Rozłucki states that the WSE is open to negotiations with any of the four pan-European exchanges, viz. the London and Frankfurt stock exchanges, Euronext and OMHEX, which includes the Scandinavian and Baltic bourses. Rozłucki did not, however, rule out regional consolidation as a first step.
And this should please Elvira Zak, a spokesperson for the Vienna floor, who, while accepting that a wider network would be beneficial for investors, maintains that exchanges should be regional in character and support their own countries.
Clearly Piotr Szeliga, vice president of the WSE, does not seem to be against the creation of a regional alliance of stock markets, pointing to the high growth rates recently experienced by the region's stock exchanges, whose combined market capitalization has soared some 40 percent over the last 12 months. And although small by European standards, these combined exchanges could become a significant player on the continental scale.
Indeed, Szeliga added that the market witnessed tremendous growth over the first half of the year, with as many as 14 IPOs and many individual investors returning to the market, with the number of new accounts rising from a loss of 10,000 in January to a gain of more than 22,000 by the end of June.
As for the privatization of the WSE, the process will kick off once the Treasury Ministry appoints an advisor to the process, a decision which Szeliga says should happen "in the next month or so." After this step has been taken, the WSE will officially be privatized, something that is most likely to happen in Q1 2005.
Szeliga also says that privatization is a necessary precursor to consolidation, seeing as other nations do not want to "re-nationalize" their floors, a factor that was behind the Lithuanian bourse's recent rejection of the WSE's attempt to buy it.
In terms of the potential for investors here, Szeliga says that such a merger would be highly beneficial, and that "if any exchange exists as part of a larger structure, more domestic and international investors will be participating in the market, which allows more liquidity to grow."
Certainly, any merger would no doubt take place through a stock swap, with other exchanges buying shares in the WSE, and the Warsaw bourse getting shares in the other exchanges in return. The WSE would then be able to sit back and watch its own shares being traded on its floor.
While both the WSE's management and the government have frequently come under fire for allegedly dragging their feet over the privatization of the stock exchange, the process seems to be gathering momentum, with the Budapest Stock Exchange becoming the latest to announce that the WSE is on its radar screens.
"We have recently held talks with [WSE] President [Wiesław] Rozłucki," says Attila Szalay-Berzeviczy, CEO of the Budapest bourse, although he adds, "But they were of a very preliminary nature and no specific decisions have been taken."
He also reveals that the Budapest exchange, whose largest shareholders are Germany's HVB Bank and the Vienna stock exchange, is gearing up for regional consolidation, something that is likely to be led by banks.
And while Szalay-Berzeviczy's remarks prompted Euronext, an alliance of the Paris, Amsterdam, Brussels and Lisbon bourses, to reconfirm its interest in acquiring the Warsaw floor, Rozłucki states that the WSE is open to negotiations with any of the four pan-European exchanges, viz. the London and Frankfurt stock exchanges, Euronext and OMHEX, which includes the Scandinavian and Baltic bourses. Rozłucki did not, however, rule out regional consolidation as a first step.
And this should please Elvira Zak, a spokesperson for the Vienna floor, who, while accepting that a wider network would be beneficial for investors, maintains that exchanges should be regional in character and support their own countries.
Clearly Piotr Szeliga, vice president of the WSE, does not seem to be against the creation of a regional alliance of stock markets, pointing to the high growth rates recently experienced by the region's stock exchanges, whose combined market capitalization has soared some 40 percent over the last 12 months. And although small by European standards, these combined exchanges could become a significant player on the continental scale.
Indeed, Szeliga added that the market witnessed tremendous growth over the first half of the year, with as many as 14 IPOs and many individual investors returning to the market, with the number of new accounts rising from a loss of 10,000 in January to a gain of more than 22,000 by the end of June.
As for the privatization of the WSE, the process will kick off once the Treasury Ministry appoints an advisor to the process, a decision which Szeliga says should happen "in the next month or so." After this step has been taken, the WSE will officially be privatized, something that is most likely to happen in Q1 2005.
Szeliga also says that privatization is a necessary precursor to consolidation, seeing as other nations do not want to "re-nationalize" their floors, a factor that was behind the Lithuanian bourse's recent rejection of the WSE's attempt to buy it.
In terms of the potential for investors here, Szeliga says that such a merger would be highly beneficial, and that "if any exchange exists as part of a larger structure, more domestic and international investors will be participating in the market, which allows more liquidity to grow."
Certainly, any merger would no doubt take place through a stock swap, with other exchanges buying shares in the WSE, and the Warsaw bourse getting shares in the other exchanges in return. The WSE would then be able to sit back and watch its own shares being traded on its floor.
