The lack of liquidity is the biggest problem of the Bulgarian Stock Exchange

May 13, 2010 | 11:31

The problem of the Bulgarian Stock Exchange (BSE) currently is not in the companies and the industry sectors traded but to the lack of market liquidity.  If the state wants to increase the investors’ interest towards the country, it should pay particular attention to the capital market.  The statement comes from Teodor Georgiev, financial analyst and manager of MBAcademy – Management & Banking Academy.

According to Georgiev, now is the time to invest on the global capital markets in the so-called cyclical companies from sectors such as IT, electronics, media, industrial manufacturing and construction.

There is a theory that when people with no financial or investment knowledge can make profits from stock market trading, then the market is close to major change in the trend (collapse).  Similarly, when less people are considering capital market investment, it is a good moment to look for market opportunities, said Georgiev.  Each moment is good for making successful investment, as long as the investor has the necessary knowledge and understand what he is doing, he added.

The privatization of state-owned companies through the stock exchange will bring only benefits, says the financial expert.  This procedure will be conducted transparently and at a price defined by the market itself, it will increase the foreign investors’ interest and would increase the liquidity.  In this sense, there is no risk for the state nor for the investors because all necessary information will be “on the table”, said Georgiev.  He added that if such would happen, the state should act in a very high professional manner and to be able to offer shares from companies and industries of interest to foreign strategic and financial investors.

According to Georgiev crisis in Greece will not affect Bulgarian economy and businesses despite the existing strong presence of Greek banks in the Bulgarian bank system.

The manager of MBAcademy explained that the company he represents organizes specialized professional training seminars and courses in management, finance, banking, insurance and leasing.  Our goal is to offer on the Bulgarian market interesting and useful topics that are practical and applicable in the West but not sufficiently discussed in the Bulgarian education system, Georgiev said.

The financial market is the place where financial instruments and assets are traded – shares, bonds, options, currencies, commodities, derivatives and others.  The financial markets are characterized with transparency of prices and trading conditions, clear fee structure and are regulated by the state, explained the expert.

The capital market (or stock exchange) is part of the financial market, where stocks, bonds and related derivatives (options, futures, etc) are traded.  The capital market meet organizations (companies, countries) who want to raise money by selling shares or debt, and investors seeking higher returns for their money.

Answering if the financial markets trend can be analyzed and forecasted, Georgiev answered that there are two main approaches – fundamental analysis and technical analysis.  Fundamental analysis forecasts the future stock price based on the company’s financial reports, the industry in which the company is operating, what is the company’s position when compared to peers, in general – the foundation (base) of the company’s operations.

Technical analysis does not care about the company itself but looks at the sentiment of the market participants towards that company.  The assets valuation and forecast of future price will be made ​​on the basis of market activity, historical prices and trading volumes.  Technical analysts use charts and related models to predict the market trend.

Everybody who has disposable cash and has interest in trading with financial instruments or wants to invest in order to increase his/her personal wealth, can try the stock market, said Georgiev.  There is no minimal experience or knowledge that one must have in order to trade/invest on the stock market.  However, we would recommend that you should prepare yourself in theory as well as to watch the market for some time before entering the real trading, noted from MBAcademy.

According to popular opinion, the market is defined by the forces of supply and demand.  They, however, are determined by the forces of fear and greed.  The market trend depends on whichever of these two forces is dominant.  In a market with rising prices, greed is prevails; in falling market and sale of shares, fear is leading, Georgiev said.

Bulgaria is already part of the common European market and as such the local prices of goods and services are related to prices of exchange-traded commodities such as oil and other energy resources, gold and other precious metals, agricultural products (coffee, corn, rice, cocoa, sugar and others), metals used in manufacturing, etc.  The change in their market price affects the price of the final product that we use and thus directly affects the average person in Bulgaria, said the analyst.

According to MBAcademy, despite the difficulties in Europe related to the current situation in Greece, the stock markets on the continent are already recovering, as such has been seen in the US.  Analysts forecast a very strong year for the stock markets of Eastern Europe, which will have a greater growth than the developed markets and the emerging markets of Asia and Latin America.

MBAcademy is organizing a 2-day training course on “Technical analysis of financial markets” which will be held INTERPRED – World Trade Center in Sofia.  The program covers the system of technical analysis by presenting the most powerful tools for forecasting the stock and currency markets.

The participants in this training will learn about the graphical figures, technical indicators and the wave theory for defining the trend of stock and currency markets, and its turning points.  They will have the opportunity to work on a case in real-time: forecasting selected currencies, equities and stock market indices.

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