Fair attempts to quell investor's stock market worries

TALLINN - It is amazing how few Estonians actually invest in the Tallinn Stock Exchange, although it seems that most businessmen are somehow involved in it.

The Tallinn Stock Exchange together with the business daily Aripaev and international news agency Reuters organized a fair called "Rahakompass (Money compass) 2000" in Tallinn on Oct. 20-21 to popularize the different investment opportunities in Estonia and raise interest in the equity market.

In 1997 the number of active investors, who made at least five stock transactions a year, was 7,000. Today the number has decreased to 2,000. According to Gert Tiivas, head of the Tallinn Stock Exchange, the aim of the stock exchange is to increase the number of investors to 25,000 by the year 2003.

"Many people say that stocks listed on the Tallinn Stock Exchange are not liquid enough because of the size of the market," said Tiivas.

"The percentage of the Estonian population that is actively trading stocks is only 3 percent to 4 percent, while in Sweden, for example, it is 60 percent."

He said that the rise in incomes and savings and the stability that comes with membership in the European Union should contribute to the increase in the number of investors in Estonia.

The aim of the fair, which took place in the Estonian National Library, is to improve the knowledge of different investment opportunities in Estonia and take away the fear of making the first transaction, said Tiivas.

"The fair was aimed at future investors - youngsters, students and those who have money but have not thought of investing it," he said. "All the participants are very amazed at how many interested visitors we had," Aadu Oja from Trigon Investment Management said.

To help promote investments the Tallinn Stock Exchange charged no transaction fees to member firms for transactions made by private persons on Oct. 20 and Oct. 23. Most firms passed the free trades onto their clients.

Also the Estonian Central Depository for Securities did not charge account operators the 75 kroon fee Oct. 16-27 for opening securities accounts. Some banks followed.

Minister of Finance Siim Kallas predicted that, based on how many people he saw attending the fair, a remarkable recovery in the investment business is underway.

"Most people keep their money on deposits, which is a very passive way of investments," said Kallas.

According to Oja, Estonians keep about 14 billion kroons in commercial banks, 60 percent of which is on a time deposit that does not return revenue on interest.

"Most Estonians are very insecure in making financial decisions and make short-run plans mainly," said Oja. "At present their interest towards stocks is low, and so are the local stock prices. I hope that they will get interested in investing soon, otherwise it will give a good opportunity for foreign strategic investors to come and take over the few good companies."

Although Kallas suggested diversifying investment portfolios, he admitted that he had not invested in stocks himself.

"I am a theorist in this field. I have a principle that if someone is active in politics he should not deal with stocks, otherwise these two things could dangerously get mixed up," he said.

Although Tiivas is managing the Tallinn Stock Exchange, he also confessed that he had so far not invested in stocks.

"Like most of the young people I spent my savings on studies, which is not cheap in the United States. I am also collecting money on a savings deposit in order to buy an apartment," said Tiivas.

Oja said that he had invested most of his money in real estate and the rest of it he had placed in Trigon's securities fund, which returned 49 percent revenue in 12 months.

Most of the top managers who were asked to promote their company's shares admitted that they did not own the company's stocks that they worked for and did not have any other stocks either.

Jaan Mannik from Eesti Telekom said that he did not have any Telekom stocks but he would like to motivate the company's employees with it in the future.

Norma's head Peep Siimon admitted that he hadn't any Norma stock and wasn't sure if he wanted any "because the company's share price had nothing to do with the company's welfare."

"People should not hurry with getting rich," Kallas warned. "Money should be placed in places where there is the biggest need for that and where it makes the biggest profit."

"Money is the blood of an economy. If it moves fast and well, it will influence the health of the economy positively," he continued.