The Slovenian capital market has seen strong growth in 2024 mainly driven by the robust performance of its blue chips, according to representatives of the Ljubljana Stock Exchange (LJSE) and major listed companies. 

Jana Kosec, head of business development at LJSE, told a webinar hosted by the bourse on September 5 that the market capitalisation of listed companies has surpassed €10bn for the first time since 2007 and currently stands at approximately €11.6bn. The average daily turnover on the exchange has exceeded €2mn this year, with total turnover by September already reaching €335mn, surpassing last year’s total of €330mn.

"July was our most liquid month, and with the volatility index on the rise, we expect the trend of increased liquidity to continue throughout the year," Kosec said. Over 90% of turnover is driven by blue-chip stocks, which include the country’s largest bank NLB, insurers Sava Re and Triglav Group, pharma company Krka and others. 

Additionally, said Kosec, there has been a "significant reawakening” in trading of debt securities, with €70mn in debt instruments traded so far this year — exceeding the combined total of the past four years.

The SBITOP index, a key performance indicator for the LJSE, surpassed 1,700 in July, reaching its highest value in 16 years. Although it experienced a slight correction in August, ending the month at approximately 1,600, the index delivered a 28% return by the end of August. The SBITOP TR (total return) index, which includes dividends, had a total return of the 35%. The top-performing stock this year has been NLB, which achieved an aggressive 45% return, followed by companies including Krka and energy company Petrol. Krka also earned the title of the most traded stock, with NLB closely behind.

"It has been a year filled with positive trends, increased liquidity, and several blue-chip stocks achieving record-high prices," Kosec told the webinar. "At LJSE, we strongly believe in the quality and untapped potential of Slovenia’s capital market.”

Modest growth

Rok Stibric, institutional equity analyst at Raiffeisen Bank International, described Slovenia as being in a phase of modest growth, with private consumption and investment slowing down, but government spending and inventory restocking supporting ongoing expansion. 

In 2023, Slovenia grew faster than most Central and Eastern European (CEE) countries, even exceeding EU and CEE averages. However, growth slowed in 2024, with real GDP increasing by just 0.2% in the second quarter, down from 1.7% in the first quarter.

"The outlook remains fragile, but we anticipate further expansion," Stibric said. 

Stibric highlighted Slovenia's strong labour market, characterised by low unemployment and high job vacancies. Wage growth, supported by falling inflation, has boosted real disposable income, yet on the downside wage growth continues to outpace productivity growth, contributing to consumer uncertainty. Access to EU funds has provided financial support for future growth, and inflation remains under control despite the potential risks of rising energy prices.

From an equity market perspective, Stibric said Slovenia remains an appealing market for international investors. "We still perceive Slovenia as an attractive market for investors, similar to Romania, where stock prices have doubled over the past five years, offering very attractive dividend yields," he said. 

The SBITOP index, dominated by a few large names, still has room for growth, according to Stibric, who cited NLB and Sava Re as particularly promising companies.

Slovenia's blue chips 

NLB, headquartered in Ljubljana, will soon expand its presence into Croatia, when its completes its acquisition of Summit Leasing. This expansion will give NLB retail operations in all the countries of the former Yugoslavia. Despite some headwinds, including the failure to acquire Addiko Bank, NLB remains committed to its ambitious strategy of doubling its business by 2030, company executives told the webinar.

Meanwhile, Krka continues to strengthen its position as one of the world's leading manufacturers of generic medicine. Celebrating its 70th anniversary this year, the company has grown from a small pharmaceutical company into a global player with nearly 13,000 employees. David Bratoz, a member of Krka's management board, pointed out that the company has seen impressive growth in key markets. Russia remains Krka’s single largest market, with sales up 9% year-on-year to €195mn. 

Chemical company Cinkarna Celje, another significant player in the Slovenian market, has maintained a strong balance sheet and liquidity position, which allows it to continue its ongoing operations while investing in future growth. The company invested heavily in 2023, particularly in titanium dioxide, and plans to invest an additional €18mn this year. Cinkarna Celje has also invested in renewable energy generation capacity, specifically solar energy projects, to reduce operating expenses and secure supply for the future.

Overall, the Slovenian capital market is seeing renewed interest from investors, driven by strong corporate performances, increased liquidity and promising growth prospects. Analysts and company representatives see the outlook for Slovenia’s capital market as bright, despite challenges such as inflation and global economic uncertainty.