EUROPE - The CEE Stock Exchange Group, which includes bourses in Vienna, Budapest, Prague and Ljubljana, said trading volumes may drop this year in the Hungarian capital following the nationalisation of private pension funds.
"No one knows what's going to happen" to the savings "but most probably they are not going to return to the market as liquidity," Michael Buhl, the Vienna bourse's co-chief executive officer, said in an interview in London yesterday. "That's a problem, so we have to see how we can make up for that. We are afraid that there might be a drop versus the trading volume last year."
Hungarian Prime Minister Viktor Orban redirected workers' mandatory private-pension payments to the state to narrow the deficit and reduce debt to European Union targets. The private pension funds said they retained 350 billion forint ($1.8bn) to 400 billion forint of the 3 trillion they managed before the government gave an ultimatum to members to transfer their money or lose out on state pensions.
Before the changes, trading by pension funds accounted for 20% to 25% of the Budapest bourse's trading volume, which averaged €3.3bn ($4.5bn) each month last year, Buhl said. Trading volumes across the group will rise this year, from a monthly average €12.1bn euros, as investors become less risk-averse with the global recovery and return to emerging markets, Buhl said.
The target for average monthly trading in Vienna is €7bn this year, compared to last year's €6.1bn, he said. Ljubljana trading will be boosted by the introduction of the Xetra electronic trading system at the end of last year, he said.
The Prague exchange, which had a monthly average trading volume of €2.5bn last year, "might be the winner this year," lifted by accelerating economic growth on strong demand for Czech exports from Germany, Buhl said.
Prague will be next to shift to the Xetra system followed by Budapest, both expected in 2012, Buhl said. Trading volume for each market will double within a year or two of the switchover to the new platform, according to Buhl. Across the four markets, trading averaged €12.1bn each month last year.
Wiener Boerse AG in 2008 bought stakes in exchanges in Ljubljana, Budapest and Prague to form an alliance. The group's combined market capitalization is €153.5bn, according to Buhl and Heinrich Schaller, who both head the Vienna exchange and now lead the group. The group would be interested in expansion if other exchanges came up for sale in the region, such as bourses in Sofia and Belgrade, provided they are cheaper than before the global financial crisis, Buhl said.
The CEE group has in vain pursued a partnership with the Warsaw Stock Exchange in recent years. The Polish bourse, the third-largest in emerging Europe after markets in Russia and Turkey, sold shares to the public in November. The CEE group remains open to some form of an alliance, Buhl said.
"Our doors are open," Buhl said. "I won't say we're giving up because that would mean we say we don't want it anymore and this is not the case."
Asked if the CEE group would consider an offer to Warsaw's shareholders, he said "I wouldn't rule anything out."
PwC, KPMG, EY and Deloitte must break up their consultancy and audit businesses into distinct firms to provide greater focus on the "most challenging and objective audits", the competition watchdog has said.
The Department for Work and Pensions (DWP) has released its first batch of guidance setting out how the guaranteed minimum pension (GMP) conversion legislation may be used to resolve unequal payments.
This week's top stories include the government spending £800,000 on a Gogglebox advert and MPs writing to The Pensions Regulator about its engagement with the Railways Pension Scheme.