Forum Archive Index - December 2002

[crt jakhel <crt@dergan.net>]

In reply to nevan lancaster (19.12.02 01:57):

>        welcome to NZ investing. The only thing I would like to know is why
> NZ. Slovienia seems to me to have much better prospects?

In my experience, knowing a company intimately is often a handicap - you
tend to like it less rather than more when you look at it closely. Thus
first-hand knowledge can be an obstacle because you worry about the
company and the stock goes its jolly way up without you. Possibly the same
is true about countries.

However, being active in the market since 1991, I've already taken
advantage of the effects of mass privatization and after the summer 2001 -
fall 2002 runup of about 100% across the board, the main Slovenian
listed companies can now be said to actually be slightly overvalued in
relation to peers abroad. Another problem is that there are industry
branches that simply do not exist here or there are no *listed* companies
operating in them.

If, for example, in early 2000 one could say that the western markets are
grossly overvalued while Slovenia is obviously undervalued, the opposite
is now slowly taking place. Of course this talk of countries or markets
loses significance somewhat if you have the inclination and patience to
hunt for neglected individual companies. I still have some holdings in
Slovenia which I believe have not ripened yet and they represent the core
of my portfolio.

The 2001/02 rise of the Slovenian market was a direct response to several
takeovers. The fact that this wave of influx of foreign money only took
place in 2001/02 and not sooner after privatization is due to the fact
that capital flows were practically blocked by a decree of the
then-governor of the central bank in 1997 and lifted upon his exit
years later.

There has been much talk in Slovenia of Us vs. Them when it comes to both
investors and markets; much self-lamenting, and lately, much
chest-beating. However, the market's rise definitely does not reflect a
similar improvement in the rule of law or the development of the political
"market". As a joke, but sadly not a vast exaggeration, one can say that
Slovenia appears to be Germany until you scratch the surface and find the
cyrillic lettering "CDELANO B CCCP". ;)

So what actually happened in my view, for the most part, is that a "tide"
(relatively speaking) of money came rolling in and covered all the cracks
and ugly spots. Hopefully the conditions of high liquidity will last until
the other aspects of the country can "grow into" the improved image, much
as a company can eventually improve fundamentals to match the originally
inflated price. However, in my opinion of history, ready availability of
money is not a stimulus, rather it can be a drawback to improvement.

Thus I am looking abroad for new opportunities for a part of the
portfolio. I am used to step in the market either as a short-term trader
with a focus on psychology (when I can afford the hours which would be a
serious problem with NZ) or as a longish-term counter-trend investor. This
is a slow process since in the last two years I have moved away from being
a full-time trader due to the changed cirmustances of my personal life.

It is that latter role of a counter-trender that has made NZ attractive to
me. At least it has been so on the first glance. I am now in the process
of building a picture of New Zealand - the country, the market, the
mindset of "the people" (which is always an oversimplification but a
crutch that is needed nevertheless). As time permits I try to follow the
daily news and find my way in the headlines with so many names I am still
clueless about. On the other hand I'm preparing a trading account so that
when my poisition on NZ is clear, I will be ready to invest (or run away
:).

If you do plan to do business in Slovenia, may I recommend the services of
the Medvesek Pusnik brokerage house; there are a few people there which I
highly respect knowing their history and performance in the market.

Feel free to mail me for details about that as well as for any other
particularities.

The Slovenian stock exchange: http://www.ljse.si

Medvesek Pusnik: http://www.medvesekpusnik.si

The Finance business daily of which I am the internet editor -
regretfully most of the content is in Slovenian:
http://www.finance-on.net

Best regards,
crt








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