Financial market appeal will increase for Latvian state-owned enterprises, predict experts
Latvia's State-Owned Companies and the Stock Exchange: A New Era
In a significant development for Latvia's economy, Uldis Cērps, the head of the Financial Sector Association, has announced that Latvijas elektriskie tīkli (Latvian Electricity Network) is set to become the first state-owned company to be listed on the stock exchange. This move is expected to pave the way for several more companies to follow suit, according to Jūlija Bistrova, an associate professor at the Institute of Economics and Entrepreneurship at Riga Technical University.
The announcement has been met with enthusiasm by Andris Grafs, Vice President and Head of the Baltic Corporate Governance Institute in Latvia. He emphasizes the importance of activating the listing of shares of state-owned companies on the stock exchange, as it would provide opportunities for pension funds to invest more in the Latvian economy.
The potential benefits of this move are far-reaching. Uldis Cērps suggests that the income from the sale of shares in state-owned companies could be used to strengthen national security, defense, and healthcare. He also believes that several large, stable companies with predictable cash flows could potentially be privatized.
However, there are concerns about the impact of the capital gains tax in Latvia, which was increased last year, on investors. This could potentially slow down the pace of investment in state-owned companies.
The bond market in Latvia is experiencing a breakthrough, with Uldis Cērps welcoming the launch of Rīgas ūdens on the bond market. Jūlija Bistrova positively assesses the announcement of the Rīgas ūdens bond issue, considering it a long-awaited one. She also believes that Rīgas ūdens may list shares in the future.
The development of the capital market is not limited to Latvia alone. Bistrova notes that Estonia's water company, Tallina Vesi, is successfully listed on the Tallinn Stock Exchange. Cērps suggests that the entry of municipalities and state-owned enterprises into the capital market can further promote its development.
Cērps also expresses concern about public perception of privatization from the 1990s and assures that the risk of poor privatization is much smaller now. He suggests that laws preventing the privatization of certain companies should be reconsidered.
Andris Grafs stresses that other companies have investment plans to attract investor funding, which would benefit everyone, including pension recipients. He believes that this move would contribute to the faster development of the capital market, with Bistrova adding that Latvia's bond market is more developed than Estonia's.
In conclusion, the announcement of Latvijas elektriskie tīkli's listing on the stock exchange marks a significant step forward for Latvia's economy. It is expected to open up new investment opportunities, strengthen national infrastructure, and promote the development of the capital market.
