Don't believe the hype #2

Louis Proyect lnp3 at
Tue Apr 17 08:43:32 MDT 2001

The New York Times, July 28, 1996, Sunday, Late Edition - Final

Where Lenin Ruled, Stocks Gain


WHERE are the world's hottest stock markets? Not in the economic
powerhouses of Asia, but in a region that largely spurned capitalism until
recently: Russia and its former satellites in Eastern Europe.

The stock markets there carry substantial risks, and even willing investors
find it hard to gain access to them. But the performances have been

Russia's market is up 64.78 percent so far in 1996, based on the MT index.
Poland's Warsaw Stock Market index has risen 53.53 percent, and Hungary's
BTI Stock Market index is up 77.82 percent. The Czech Republic Stock Market
index, the most modest performer of the group, is still up 27.63 percent
this year.

Economic changes and apparently cheap stocks are the biggest reasons for
the regional run-up. By decisively defeating his Communist opponent in the
final round of presidential elections this month, Boris N. Yeltsin has sent
a signal that Russia, like its former satellites, may be committed to
democratic capitalism, even if its performance is wobbly for a while. The
prospect of that victory is what drew foreign investors to Russia this year.


NY Times, April 17, 2001

Eastern Europe Exchanges Consider Merging Operations


PRAGUE, April 16 - Nearly a decade ago, as emerging democracies in Central
and Eastern Europe shifted business and industry to private hands, stock
markets began to sprout across the region. Now, a dearth of issues,
stagnant trading volumes and investor apathy have analysts and traders
warning that unless these markets combine and grow, they will have no future.

Since foreign investors have bought out the most promising listed companies
and bankruptcies have scuttled a rash of others, only half a dozen actively
traded stocks remain in most markets. Small investors and local
institutions prefer the safety and returns of bonds and foreign equities.
Companies find it easier and cheaper to raise capital from private equity
investment, bank loans and bonds. Foreign investors interested in regional
stocks favor buying them through American or global depository receipts
listed in London, New York or Frankfurt, where there is more liquidity.

Traders say many regional markets are too opaque for their clients and the
costs of maintaining offices are too high for the low returns.

Full article:

Louis Proyect
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