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Market Scene : Bulls Rule Slovenia's New Stock Exchange : It began with a scorebaord and a few chairs in 1991. Now, many predict a boom as the country goes capitalist.


LJUBLJANA, SLOVENIA — The "Big Board" lit up. Traders slipped out of down parkas that covered business suits. A guard stoically took his place by the sliding glass doors.

And, at the stroke of 10:02 a.m., the floor leader chimed a brass bell, the traders huddled around the board, the television crews took their positions and spectators in the upper gallery pressed their faces against the glass.

Just another Tuesday at the Ljubljana Stock Exchange: Lights! Camera! Capitalism!

Though it meets but two hours a day, twice a week, and would be dwarfed by the massive New York Stock Exchange, Slovenia's Ljubjlana Stock Exchange Inc. is one of the former Yugoslav republic's most visible efforts at instituting a free-market economic system. In charge are a slew of westward-leaning yuppies like Boris Snuderl, the 34-year-old chief executive of what the Slovenes call the "Borza."

"C'mon," he said, leaning back into a plump leather chair. "This is a small country. There is no advanced technology. There are no oil wells, no coal deposits. So what (else) is there to invest in?"

Like other Central and East European nations trying to jettison communist economics, this Alpine nation of 2 million hopes to use the exchange to spur investment and growth. And, thanks in part to its record as the most prosperous of the former Yugoslav federation's republics, economists figure it has a better chance than many of pulling through the financial transition to capitalism now taking place among its former East Bloc neighbors.

Turnover at the exchange grew from 200 million German marks in 1991 to 1.9 billion marks last year, and there are 28 companies and 35 securities being traded. With the debut in December of computerized trading, and the country's plans to privatize the economy, observers believe the market is on the verge of a boom.

Slovenia's trading history dates to 1924, when currency and commodity transactions were the primary lines of business. The market closed in 1941 because of World War II and was abolished in 1953 as Yugoslavia's Communists took charge.

That changed when Slovenia declared its independence in 1991. The exchange had humble beginnings--a room with a scoreboard and a few chairs--but it soon evolved into a genuine enterprise, with a swank trading floor that features a marble inlaid counter snaking its way through a basketball-court-sized room.

The glitzy setup seemed designed to tempt people to taste the trappings of capitalism. But economists like Joze Mencinger of Ljubljana counter that in real terms, the exchange itself is nothing more than a good show. "It's very well furnished. They've got nice lights, etc.," Mencinger said. "(But) my impression is that the stock exchange is not a reflection of the economy. It's not providing investment resources."

Small groups of traders are exchanging securities back and forth, Mencinger said, rather than having the market operate as a source of capital for business.

The Slovene system also seems to be designed by default to attract as much domestic investment as possible. Unfavorable tax laws, complicated regulations and ever-changing economic reform legislation discourage outside capital, insiders claim.

And with unemployment estimated as high as 15%, and a war raging in nearby Bosnia-Herzegovina, potential foreign investors are all the more reluctant to put their money down.

But Snuderl argues that the exchange has learned from mistakes of other fledgling East European markets and has patterned Slovenia's exchange on the successful U.S. and Canadian models. That will help, he said, as the market braces for what may be dramatic growth. Privatization laws, which will give many workers shares in the companies in which they labored under communism, will make 2,600 companies eligible to be traded, Snuderl said. Those companies include some of Slovenia's biggest corporations, such as Krka, a pharmaceuticals company, and Emona, a hotel conglomerate.

"This is going to be a stockholders' nation. Everybody's going to be a stockholder," said the smiling Snuderl.

Some stock watchers, like Gavin Gray, former editor of Central European, a business monthly, remain cautious.

"I would see the industrial structure becoming like Germany's," he said, "and that means that the bulk of the industrial structure comes from privately held companies, which is bad news for a stock exchange."

For the moment, Slovenes are seemingly enthusiastic about a market that trades mostly municipal bonds and government and short-term securities. An upsurge in the market during the late summer spurred what exchange watchers fear may be false hopes that money can be made easily.

Exchange workers talk constantly about creating educational and promotional material, items that will explain stocks, securities and municipal bonds. "They (Slovenes) want to buy shares like apples in the market," said Vesna Likar, a trader with the Nika d.d. brokerage house. "But they don't know anything about what a share can offer."


Slovene television is also heightening interest in the market with extensive thrice-weekly reports on the trading.

Traders say television's spotlight is turning them into celebrities. Hermina Krt, 30, also a trader for the Nika brokerage house, said people on the street recognize her and stop to ask for investment advice.

"It's good for business," she said.

Meanwhile, young Slovenes like Alain Al Soufi, a student, regularly show up at the exchange to watch the action and dream about the day they'll cross from the visitors box to the floor. The 23-year-old from Novo Mesto, about 40 miles south of Ljubljana, has already passed the needed exams and shyly swears he'll make money "in time."

"We're booked for visitor tours until May of next year," boasted Lidija Gabrijelcic, a public relations representative for the bourse.

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