ZAGREB, 26 Aug (Hina) - Representatives of eight countries signed a memorandum of understanding in Zagreb to strengthen capital markets in their countries and promote greater integration, which should eventually lead to the establishment of a joint stock exchange index.
The memorandum was signed by finance ministers or senior officials from Slovenia, Poland, Slovakia, Romania, Bulgaria, Hungary, North Macedonia and Croatia. It confirms their shared political will and commitment to reforms designed to create stronger, more efficient and more competitive capital markets. The initiative is also expected to enhance the countries' competitiveness, improve cross-border trade and investment, facilitate access to capital, attract international investors and ultimately stimulate economic growth.
Croatia's Deputy Prime Minister and Finance Minister Marko Primorac noted that capital markets in Eastern and Southeastern Europe are small and fragmented, with differing trading rules and platforms, making cross-border cooperation and trading challenging.
"That is why the countries have decided to join forces and take a collective step forward," Primorac said. The aim is to harmonise legislation, trading rules, infrastructure access, supervisory and licensing procedures, trading and post-trading infrastructure, including central clearing and depository institutions, so that access to one market effectively equates to access to all.
Encouraging retail investors
The initiative also seeks to encourage retail investors to participate in the capital market, given the high levels of savings currently held in banks at relatively low interest rates. At the same time, there is a need to finance young and innovative small and medium-sized enterprises, while providing stable and secure instruments and platforms for citizens to save and invest.
"By uniting our markets, and potentially creating a joint stock exchange index in the future, we believe we could be recognised as an investment destination on the global financial map, diversify our investor and issuer base, increase trading volumes and attract foreign capital," Primorac said. He added that strong political support, coupled with a clear action plan to be drawn up shortly, should accelerate the integration process.
Primorac also emphasised that the initiative is open, and other countries, including non-EU members, may join. "It is particularly important for our Southeastern neighbours that we integrate them as much as possible and assist them on their path towards European integration," he said.
Memorandum represents a major step forward
Slovenian Finance Minister Klemen Boštjančič said underdeveloped capital markets in Central and Southeastern Europe are a major obstacle to economic growth, as bank financing alone, while still important, is insufficient. He described the memorandum as a significant step forward and stressed the importance of implementing what has been agreed.
Slovak Finance Minister Ladislav Kamenicky said the initiative is more important than some may realise and could result in a "small capital market union", aligning with long-standing EU-level efforts.
The signing builds on a memorandum of understanding concluded in late 2024 by the stock exchanges in Bratislava, Bucharest, Budapest, Ljubljana, Skopje, Sofia, Warsaw and Zagreb, aimed at strengthening cooperation and integration in Central and Southeastern Europe, with support from the European Bank for Reconstruction and Development (EBRD).
Miljan Ždrale, EBRD Regional Director for Central Europe, highlighted the bank's extensive experience in developing capital markets and expressed satisfaction with significant activity this year on the Zagreb Stock Exchange (ZSE), including two IPOs. He noted that the EBRD has invested nearly €200 million in the ZSE over the past five years.
Ivana Gažić, CEO of the Zagreb Stock Exchange, reported that turnover on the domestic exchange rose 90% in the first six months of 2025 compared with the same period last year. She also announced the third IPO of the year, from the Tokić Group. Earlier in the year, companies Ing-Grad and Žito also listed shares.
"We can be very satisfied with the trading volumes generated by the new shares, which have attracted many retail investors," Gažić said. She declined to comment on the Financial Agency's announcement regarding a potential takeover of the ZSE, citing legal restrictions.
The headquarters of the new company, which will oversee the integration of the stock exchanges, will be in Zagreb. Gažić added that the location was chosen democratically, through a vote of representatives from the participating exchanges, and that the exact site should be confirmed by the end of the year.
Primorac on the German crisis, budget revision and union demands
Minister Primorac also addressed several questions from journalists outside the main topic, including the potential impact of a structural crisis in Germany on the Croatian economy.
Highlighting that Germany is one of Croatia's key trading partners, Primorac said economic difficulties there are not new, and that recession was narrowly avoided last quarter. He expressed hope for an improvement, noting potential negative effects on Croatian exports to Germany. "Of course, this is something that could concern us should the situation deteriorate significantly," he said.
On the upcoming budget revision, Primorac said preparations are underway, with a clearer picture expected by the end of September and adoption likely by mid-October.
Asked whether there would be enough funds to meet union demands on meal allowances and pay rises, he said, "We'll see," adding that these negotiations are led by Labour Minister Marin Piletić.
"We will help as much as we can, but we must be realistic with budget ambitions. Our aim is to satisfy as many demands as possible, but we must remain practical," Primorac said.
