The traditional summer lethargy on the Bulgarian Stock Exchange (BSE) has raised the question about the need of more good quality and liquidity public companies listed on the BSE. Several dailies quote analysts who believe some of the reasons for the negative trend on the BSE are not only in its dependency on world markets but also in the companies whose shares are traded. After the serious index decline in the past seven months, the BSE capitalisation has tumbled down to little more than 20 billion leva or a mere 30 per cent of the forecast GDP of Bulgaria for 2008. For comparison, this ratio was 55 per cent in 2007 and thus the local stock exchange was closer to the levels of developed markets.

The indices on the BSE lost over 40 per cent of their value over the past seven months, which almost completely erased the profits of 2007 Dnevnik said.

The main factors for the stagnation were deteriorating macroeconomic indicators such as the inflation rate and the current account gap, as well as receding investors who feared overpriced local shares.

Still, one of the main weaknesses of the Bulgarian market is the shortage of attractive shares to invest in, analysts said. As confirmation of this fact comes the news that just three companies, part of the Sofix index, which includes the 19 most liquid stocks on the BSE, brought up positive yield to the investors in July. Sixteen of the most liquid ones lost between four per cent and 38 per cent of their share value, Pari daily said.

All this has enticed analysts to ask for more companies to go public and for stakes in state-owned firms to be sold on the BSE as a way to bring back investors’ attention.