Stock Exchange Challenges – Why Capital Market Remains Undeveloped
We should mull over regional development and expansion of financial services to strengthen Georgian Stock Exchange (GSE) as one of the key economic drivers. Many companies in the region, namely, in Azerbaijan, Armenia and Uzbekistan are ready to place their securities at Georgian Stock Exchange (GSE), Galt&Taggart investment company director Irakli Kirtava told Business Partner.
The market of state and corporate securities has increased 14 times over the past 5 years, but this market remains small anyway. Corporate bonds are key actors on the stock exchange. No new company has appeared on the market for many years. As for December 18, 2019, Georgian Stock Exchange (GSE) has recorded deals worth 23.6 million GEL and 28.56 million USD.
This year international financial institutions issued GEL-denominated bonds. Namely, six international organizations issued 218 million GEL bonds. At the same time, in the reporting period, Georgian companies issued 415 million GEL corporate bonds and most of them were placed at GSE.
The Government’s economic team should follow a common strategy to enhance the stock exchange as the economic stimulating platform, like developed countries, the Galt&taggart director noted.
“A strategic development document was prepared in 2015-2016. It was a good document, but today it is obsolete. This is an important aspect for a country like Georgia, because our market is very poor, we have very small economy, while the securities market likes big scales and international investors chase big scales. Without international investors, only domestic investors cannot develop the stock market. Therefore it is very important that the Government’s economic team follow a common plan”, Kirtava noted.
It is crucial to consider Georgian Stock Exchange development within regional framework, he added.
“We should care for growing our scales and we have good potential for that. We should just consider the development of financial services within the framework of regional securities. With well-developed banking system and stable financial environment, Georgia has this potential. This is an exemplary country in the region with high security standards. On the other hand, this potential was outlined in 2010 after regional countries such as Armenia, Azerbaijan and Uzbekistan and their companies determined Georgia as one of the alternative directions for placing their securities”, Kirtava noted.