Ilian Scarlatov: Why the money on the Capital Markets doesn't “talk”? | The Sound of Money (13.05.2015)
“Truthfully, I am an optimist, even though I may not give off such impression. I am an optimist, because I believe that we can succeed regardless of the country. All of us who decided to return and stay in Bulgaria believe that we can do something and leave it for the future generations.” said Ilian Scarlatov, managing partner at the investment bank Mane Capital during the panel “Economic prospects for Bulgaria” at the forum “The Sound of Money”.
“Let me tell you why I am an optimist. It is because the stock exchange and the companies are doing well. They are priced attractively but why won’t the money talk? First of all, there is no predictability. For someone to invest in something there has to be predictability. The direct foreign investments for last year were less than 3% of the GDP, which is tragic. This shows the investors’ opinion on the current situation in Bulgaria. The stock exchange falls under that category.”
“The money won’t talk loud enough because we have a country where the laws state that investments in shares through IPO are actually not investments in shares. You invest in shares only if you buy them through the BSE” said Scarlatov. “You do not take into account the fact that through an IPO the money flows directly into the company. If you buy shares through the exchange, the money flows into the pocket of the person who sold them to you. This is a subscript but it is not insignificant. Real investments in the stock exchange happen when you buy shares through an IPO. This is a real investment into the economy. However, according to the government, this not an investment” said the expert.
“Money won’t talk because the government is trying to cut the pension system and make it look like a small intervention. Everyone knows that a cut is a cut no matter what.”
“Money won’t talk because the majorities do whatever they want without any consequences” added Scarlatov. “I am not a pessimist but thinking of the Bulgarian capital and dedicating 12 years of my life to it, I want the government to at least stay out of our way if it is not trying to help. So that there would be at least one person with some thought in his head, who knows what a capital market is and how it functions and knows how the country can take advantage of it. This is an instrument made to be used, not something made to be put in a museum.”
“We all know the Bulgarian Stock Exchange: low liquidity, export oriented companies and so on. What our colleagues said I thoroughly support. We are a small market with a qualified workforce and we should mostly export goods with added intellectual value. We discussed Roobar yesterday. They have founded a small entity compared to the European standards but they have a huge intellectual added value.” said Scarlatov.
“This is true for all sectors – specific niches, new know-how, and talent. There is no room for pessimism. Once again, my request towards the government is “Please do not interfere! Do not kill the little economy we have left”. The heart of the capitalism is the capital market. After those several optimistic messages “I anticipate that if we all start working towards the same vision of where we want to be in the next 5 or 10 years, things will happen. I’m hopeful that the situation in Bulgaria will start improving” said Ilian Scarlatov.
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