Macroeconomic regulation of securities market in the conditions of post-communist transformations (ABSTRACT)

Dato Gelashvili

Stock exchanges of East Europe and the former USSR, excluding the Warsaw Stock Exchange, are poorly developed as compared to those of West Europe. Growth of securities market in Central and East European countries of post-communist transformations is characterized in accordance with several features:

– Banks patently dominate the financial sector;
– Property structure is concentrated while circulation and liquidity of shares is comparatively small;
– Influence of foreign investments, first of all, the European Union and Germany on the formation of stock exchange;
– Increase of securities market capitalization in the countries of post-communist transformations was mainly caused by privatization and growth of assets cost, but not by issue of new shares;
Development of promissory notes market in the countries of Central and Eastern Europe has been first of all favorable for public securities;
– Pension reform and fast growth of insurance market promoted development of internal securities ;
– Major companies are less interested in local stock exchange listing preferring US and European stock exchanges. There occurs consolidation of stock exchanges on regional market or their merger with large European exchanges.
Grounds for the growth of corporate securities in Georgia have also been laid by privatization, though the process of property redistribution on capital market goes on without attracting any new investments.
Growth of capital market in Georgia is much impeded by shade economy, low monetization level, non-optimal policy of public securities market regulation, unsettlement of internal debt issue, unsustainable macroeconomic indicators, unsettled conflicts, non-transparent stock market, postponement of reforms (e.g. pension reform), lack of appropriate tax stimuli for the capital market growth, low development level of proprietors’ protection system and execution of contract obligations.