It is hard to make economic progress solely by borrowing from banks, and raising capital on a well-organised stock exchange is a prerequisite for successful growth and development of companies, a conference was told in Zagreb on Tuesday.

The conference on possibilities of funding the economy through capital markets and alternative investment funds and on the role of institutional investors in the development of the economy was organised by the Croatian Chamber of Commerce (HGK) and the Croatian regulator of financial services (HANFA).

Jurica Jednacak of HANFA’s governing council said that one could see a shift in sentiment towards the capital market both in Croatia and in the European Union.

Over the last year, Croatia had two initial public offerings (IPO) plus one secondary offering, and in the EU a record high 180 IPOs have been registered so far this year, and the capital equivalent to 0.6% of the EU’s GDP has been raised in that way, Jednacak said.

He is confident that these positive trends will continue both in the EU and in Croatia and considers them good for the economy, companies and investors.

Jednacak  said that a significant number of new investors have been noticed on the Zagreb Stock Exchange, and that the ZSE indices over recent days have exceeded their levels in the pre-crisis February.

He said that last Friday the Croatian parliament passed the amended law on alternative investment funds, after studies by HANFA and the Finance Ministry had found that the Croatian regulation of this segment of the financial industry was the most rigorous in the EU. The amended law brings liberalization, he explained, adding that it would pave the way for financing SMEs.

Josip Zaher of the HGK said that mandatory pension funds in Croatia had about HRK 130 billion at their disposal, appealing for most of this amount to be placed on the market.

Zaher said that a mere 11% of the capital of those funds had been invested in the stock of Croatian companies.