The heads of the Three Seas region exchanges - Warsaw (Poland), Prague (Czech Republic), Bratislava (Slovakia), Budapest (Hungary)- Zagreb (Croatia) , Bucharest (Romania) and Ljubljana (Slovenia) have signed a letter of intent concerning the publication of a new index, CEEplus.
The move is a part of the ongoing collaboration among the CEE capital markets which intent to further support growth and investment in a region constituting nearly one-third of the EU's total area with more than 112 million inhabitants.
The launch of the CEEplus index was officially announced in the presence of the Polish Minister of Investment and Economic Development Jerzy Kwieciński at the 29th Economic Forum in the mountain town of Krynica Zdrój, Poland, the largest annual conference in Central and Eastern Europe.
The Warsaw Stock Exchange (GPW) will be responsible for the calculation and publication of the new index. The markets operated by the GPW Group are the largest in Central and Eastern Europe. The total capitalisation of 460 domestic and foreign companies listed on the Main Market was PLN 1,086.2 billion (EUR 247.7 billion) at the end of August 2019.
“The launch of a joint exchange index for companies in the V4 countries, Croatia, Romania and Slovenia is a major step towards closer regional co-operation, which opens the region to the world. The Three Seas Region could become the economic heart of Europe. While the European Union undergoes a crisis of economic slow-down, Central Europe has a potential that is not fully tapped. The tool represented by CEEplus will make the region more attractive to investors, supporting even faster economic growth of the region,” Polish Prime Minister Mateusz Morawiecki was quoted as saying in a statement.
Commenting on the launch of the index Mr Kwiecinski stated:
“The Three Seas Initiative was initiated by the public sector but the success of the partnership largely depends on the engagement of private investors. The launch of the new index CEEplus sends a clear message telling them that the door to investing is wide open. The value of the Three Seas market and its demand for capital are such that infrastructure investments in the region alone will range from EUR 200 billion to EUR 1.1 trillion by 2030. If you look at the investment map of the world, we have put in a very prominent pin.”
The Three Seas Initiative was launched in 2015 and includes the 12 EU Member States located between the Adriatic, the Baltic and the Black Seas: Austria, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.
The index portfolio will include more than 100 of the largest and most liquid stocks listed on the exchanges of the V4 countries and Croatia, Romania and Slovenia. The participating stocks will have to meet the liquidity criterion: an average value of trading per session of at least 90,000 euro over a six-month period
CEEplus will be published daily, based on closing prices converted at the exchange rate of the National Bank of Poland for local currencies, the euro, and the US dollar.
The index will be the underlying of a passive fund managed by TFI PZU, one of the biggest Investment Funds in Poland, which is part of one of the PZU Group, one the largest financial institutions in Poland and in Central and Eastern Europe. The Group is led by Powszechny Zakład Ubezpieczeń S.A. (PZU) – a 216-year old insurance company quoted on the Warsaw Stock Exchange.
“More and more investors are looking for diversified investment opportunities involving Three Seas region blue-chips. The Polish capital market is one of the world’s 25 developed markets and it is our mission to promote Three Seas companies. I am glad that we can offer an innovative investment product in partnership with the exchanges and the biggest financial institution of the region,” said Marek Dietl, President of the GPW Management Board.
The project aims to ensure that the CEE exchanges will boost their attractiveness and make their voice stronger across debates concerning EU capital markets.
From his end, Paweł Surówka, President of the PZU Group said: “We are proud that we can join the Warsaw Stock Exchange and other regional exchanges in this unique initiative which demonstrates the activity and aspirations of the Three Seas economies. It is no surprise that we take this special opportunity to launch a fund based on CEEplus. I do believe that its performance will be a reflection of the ambitions of the regional exchanges. We very much believe in the potential of this growing part of Europe and are convinced that it is an ideal investment destination for investors from around the world.”
The first discussions about a joint index were initiated at the first V4+2 summit of CEE (Central and Eastern European) exchanges held in Prague on 20 February 2018. The event brought together the CEOs from Poland, Czech Republic, Hungary and Slovakia, as well as Romania and Croatia.
The plan to launch a regional index was announced by the CEOs of the regional exchanges during the debate “Co-operation of CEE Capital Markets” at the 28th Economic Forum in Krynica-Zdrój.
The launch of the new index is another step towards unlocking CEE region's economic potential and further strengthen its capital markets.
(Note: V4 are Visegrad Group countries, namely Poland, the Czech Republic, Slovakia and Hungary)