Short sales and margin trading on the Bulgarian Stock Exchange (BSE) will start from the beginning of February, Milcho Stoimenov from the Financial Supervision Commission told Bulgarian-language Pari daily. It will happen after the amendments to Ordinance 16 regulating the procedure and terms for the two types of deals enter into force. The amendments have to be voted on at second reading next week and printed in the State Gazette by the end of January. The changes are aimed at reducing the criteria for securities eligible for margin trading and short sales. Under the current rules only a couple of companies meet the requirements. The possibility of conducting such operations on the regulated markets of other European Union member states will also be regulated.
According to Viktor Papazov, chairman of the BSE’s board of directors, it will take some time for the short sales to kick off because the trading mechanism needs time to be clarified.
While waiting for more clarity on the subject stocks continued their loosing streak on January 14, dragged down by widespread selling, probably by foreign investors, brokers told SeeNews wire agency.
The blue-chip Sofix index, which includes the 16 most liquid stocks on the BSE, fell 1.54 per cent to 1634.61 points and the broad BG40 index was down 1.8 per cent, closing at 478.78 points.
“It can not be said that there is a concrete reason for the decline of the market,” Tihomir Kaundziev, financial analyst at investment intermediary Beta Corp, told SeeNews.
“There was massive selling of certain shares.” Among the shares that saw significant sales were those of the blue-chip industrial group Chimimport. Its shares dropped 3.2 per cent to end at 13.74 leva.
“I suppose that most of the sales were due to foreign investors who were exiting positions,” Kaundziev said, adding that the inactivity of institutional investors contributed to the overall decline of the market.
The Bulgarian stock market, which surged to a series of all-time highs throughout last year, entered a correction phase in November and has rarely increased since.
On January 14, 98 stocks fell, 35 rose and 17 were flat. Those loosing value included infrastructure construction companies, led by Trace Group Hold, which tumbled 7.6 per cent to 219 leva.
Total turnover on the BSE, excluding block trading and other pre-agreed deals, rose to 10.2 million leva.
Meanwhile Bulgarian meat processing company Mekom said it will launch its initial public offering (IPO) on January 21. The company hopes to raise 23.5 million leva for capacity expansion and investments abroad. The offering will be managed by United Bulgarian Bank and will run for three days. Mekom will offer 10 682 800 shares to the public, with a face value of one lev, at a minimum price of 2.2 leva each. The issue will raise the company’s capital by a nominal 20 per cent to some 64.1 million leva.
The flotation will open the Bulgarian 2008 IPO season. Local bottle cap producer Herti will hold its IPO on January 25 and some 60 companies look set to follow suit this year.
