2011 saw highest level of investments in share issues in seven years

[Info-Prim Neo interview with Nina Dosca, head of the General Securities Supervision Division of the National Financial Market Commission] [– How would you describe the developments on the securities market of Moldova last year?] – I would like to remind that the main goal of the securities market is to attract investments to the national economy. The two indicators that usually show the developments on the market are the volume of investments attracted through the primary market or the volume of investments made in companies though share issues, and the volume of transactions on the secondary market, i.e. the stock market and the over-the-counter market. According to preliminary data, the investments made in share issues in 2011 totaled 1.319 billion lei, as against 875 million lei in 2010, 664 million lei in 2009, and 816 million lei in 2008. In fact, 2011 saw the highest level of investments in share issues over the last seven years. The volume of transactions on the secondary securities market was 1.907 billion lei, according to the preliminary data. If we compare the situation during the last seven years, this figure was higher only in 2007, when it exceeded 2 billion lei. [– You repeatedly said that the securities market has potential to develop. What did you mean?] – For example, 105 joint stock companies of the 3 042 included in the State Securities Register issued additional shares last year. This is only 3.5%. The figures confirm that not all the company managers realize the importance of such a method of attracting investments to companies as the placement of shares or other financial instruments that are frequently used on the financial markets of other countries. They habitually resort to bank loans, pledging a part of the company’s assets. It can happen that these loans cannot be repaid on time, especially in times of crises, and this can lead to the company’s insolvency. On the secondary market, there are also great reserves. For instance, shares in 246 joint stock companies of the 1 021 listed on the Stock Exchange were traded on the stock market. Shares in 409 joint stock companies of the 3 042 included in the State Securities Register were traded on the over-the-counter market. This can mean that the traded shares are not attractive for the potential buyers or their price is higher than that they are ready to pay. The offer on the Stock Exchange in 2011 was 98% composed of bids to sell, not to purchase shares. This is also probably because some of the sold holdings are small and do not hold interest for the investors that want to buy more shares so as to have greater influence on the administration of a company. [– Which of the traded shares were more attractive and who purchased them?] – The shares in banks remain more attractive. The shares on the Stock Exchange and on the over-the-counter market are bought both by national and foreign investors. Both foreign companies working in Moldova and companies with local capital issue shares. [– What other events marked the securities market in 2011?] – I would emphasize the amendments to the Law on Joint Stock Companies that came into force on July 3, 2011. They contain a series of regulations concerning the settlement of corporate conflicts, holding of general assemblies of shareholders, transactions involving conflicts of interests. There are provisions regarding the disclosure of information by joint stock companies, protection of the rights of shareholders, including the minority ones, by setting the formula of the price at which the majority shareholders are obliged to buy shares from the minority ones. These amendments will make the work of the joint stock companies more correct and transparent. All the joint stock companies will hold general assemblies of shareholders in the first half of the year and these provisions will be discussed and included in the statutes of companies so that they comply with the new regulations.