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SLOVENIA


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 26,284 21,108 18,800 63
         
GNI per capita
 US $ 11,830 9,810 9,760 51
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 122 - (26/07/07)

The top performer
Slovenia is an undoubted success story. But one can have too much of a good thing.

Slovenia started using the euro in January and its US$35 billion economy expanded 7.2 per cent in the first quarter, the fastest pace since 1999. Government-owned pension funds fuelled the equity market. Local mutual funds also bought the shares as Slovenians' savings rose. Foreigners hold about 5 per cent.

A hotter share market than China's; the best in the world
Slovenia's share rally has made its equity market more expensive than China's. Now, however, investors say it is time to sell. "We are gradually reducing Slovenian shares because the market feels hot," said Jernej Kozlevcar, who manages about US$742 million ($A866 million) at Triglav Asset Management in Ljubljana. "Recent growth of the market is mainly based on speculation about consolidation and less on business results."

The Slovene Stock Exchange Index (SBI20) was the best-performing equity benchmark in the world last quarter, jumping 39 per cent in dollar terms, according to Bloomberg data.

It has more than quadrupled since 2002, paced by petroleum company, Petrol, and logistics company, Intereuropa.

SBI20 companies trade at an average of 38.9 times estimated earnings, more than twice as much as their average for the past year. The price-earnings ratio is also more than double that of the Morgan Stanley Capital International Emerging Markets Index, a global gauge for developing economies. China's CSI 300 Index members trade at 32.9 times earnings.

But there are still optimists around
Not everyone predicts an end to the rally. Merger and acquisition speculation would continue to support shares, said Sasa Mohorko, a broker at Slovenian brokerage Publikum. "I don't think the market is risky," he said. "The second half of the year will be bullish."

The Government plans to sell 39 per cent of Telekom Slovenije next month. That has helped increase the share price by 55 per cent. Intereuropa shares doubled this year on anticipation that the state will sell its holding. Private ownership would make it easier for foreign businesses to take over companies in Slovenia.

Even so, none of the asset sales that Prime Minister Janez Jansa promised when he took power in 2004 have come to pass.

New bank governor
The governor of the Central Bank is a most important post in Slovenia. Its parliament on July 10th approved a new Central Bank governor, after months of political wrangling.

Marko Kranjec, 67, a prominent economics and financial expert who was the young nation's first finance minister and once worked at the World Bank, was supported by 74 deputies in the 90-seat chamber. One voted against him, others abstained.

Kranjec is the Slovenian equivalent of Poland's Leszek Balcerowicz, who charted its reform course in the 1990s and was called back to the Polish Central Bank earlier this decade as the indispensable man (his stint ended in January, however). Kranjec is the central bankers' central banker, absolutely reliable and full of integrity. The economy could not be in better hands. 

Slovenia's Central Bank was without a governor - who automatically is a member of the European Central Bank - for nearly three months as a result of President Janez Drnovsek and Prime Minister Janez Jansa's argument over the candidates.

Parliament, dominated by allies of Jansa's central-right government, had rejected two previous Drnovsek candidates.

The dispute threatened to damage the image of Slovenia, which adopted the euro on Jan. 1 and won plaudits for its smooth transition to the single currency. The two leaders eventually agreed to support Kranjec.

Jansa Meets European Commission Officials over EU Presidency
Slovenia is gearing up to assume the EU presidency within six months. Prime Minister Janez Jansa met in Ljubljana on Friday, 13 July Joao Vale de Almeida, head of cabinet of the President of the European Commission, and Secretary-General of the European Commission Catherine Day. The officials discussed Slovenia's plans for the EU presidency in the first half of 2008. 

According to a press release from the prime minister's office, Jansa acquainted the high-ranking officials with the topics Slovenia has set as its presidency priorities. 

These include the reform of the institutional basis of the EU, energy, climate change, intercultural dialogue, the Western Balkans, and the Lisbon Strategy. 

The officials also discussed the intergovernmental conference on the EU reform treaty, which was to start on 23 July. Slovenia is hoping that the treaty will be signed during Portugal's EU presidency, which would provide enough time for ratification. Slovenia will closely monitor the ratification procedure, the press release reads. 

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AVIATION

Adria Airways increases passengers in H1 by 7%


Adria Airways recently announced that in the first half of 2007, it carried 478,372 passengers, up by seven per cent over the same period last year, Slovene Press Agency recently reported. 
The company also increased the number of its scheduled flights by eight per cent in the same period, as well as operating 18 per cent more charter flights. Its cabin occupancy rate stood at 70 per cent, Adria was cited as saying, adding that the capital injection and purchase of two new Canadair Regional Jet CRJ900 planes were the main business developments in the first two quarters of the year. Meanwhile, the revenues of Adria's maintenance centre for CRJ aircraft were up by 64 per cent; and a total of 43 service checks were carried out in the period. The company also expanded its services to maintain Airbus airplanes and plans to construct a third hangar to further expand its aircraft maintenance business. Adria Airways is Slovenia's flag carrier.

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FOREIGN EXPANSION

Big companies eyeing expansion in Croatia

Several big Slovenian companies have announced plans to expand in Croatia, Slovene Press Agency reported on June 12th, cited by Reporter.gr. 
The Croatian market is not only of interest to Slovenian companies, but also affords investment capital which is desirable in Slovenia, Bostjan Tancer, a member of the management board of KD Asset Management, was cited by the news source as saying. Financial firm KD Holding, port operator Luka Koper, retailer Mercator, energy company Petrol, telco Telekom Slovenija and spa operator Terme Catez recently unveiled their plans to expand in Croatia. Mercator announced new shopping centres in Zagreb, Rijeka and Labin, Slovene Press Agency reported. KD Holding wants to expand on the Croatian insurance and banking market and Terme Catez would like to enter the market, it was reported.

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MANUFACTURING

Kovinoplastika Loz takes majority stake in Loz-based manufacturer

The company established by the senior employees of the plastics and steel fittings maker Kovinoplastika Loz has acquired a 41.84 per cent-stake in the Loz-based manufacturer. This brings its total stake in the company to 61.99 per cent, the nominee company said, Slovene Press Agency reported on June 26, cited by Reporter.gr. 
The nominee company offered 16.6 Euro per share in cash in a public bid. This brings the total paid for the additional stake to 19.6 million Euro. The major sellers were the state-run Restitution Fund (SOD) and Pension Fund Management (KAD), which held a combined stake of 26.34 per cent. 

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PHARMACEUTICALS

Krka presents new 80m Euro Sinteza 4 plant

Pharma Company Krka presented its 80 million Euro plant, which will manufacture active ingredients, Slovene Press Agency reported on June 13th, cited by Reporter.gr. 
The Sinteza 4 plant will enable Slovenia's largest drug maker to produce most of active ingredients by itself, which its CEO, Joze Colaric, said would increase value added, cut costs and improve its competitive ability. The plant in Novo Mesto will also allow Krka to mount a more efficient defence against lawsuits, it was reported. Quite a few have been filed against Krka, Colaric was cited as saying, adding that the majority of them were related to the process of chemical synthesis. In what the chairman termed as one of Krka's largest and most demanding investments, Sinteza 4 will supply ingredients for the company's plants in Novo Mesto, Croatia, Poland and Russia. Sinteza 4 launched production in August last year. Slovenia's 2007 Euro changeover allowed many foreign investors to buy Krka's shares, it was reported.

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SHIPPING

German Doehle acquires majority stake in Splosna plovba

German ship owner, Peter Doehle, has become the majority owner of Slovenian shipping company, Splosna plovba. This came after it bought a 29.65 per cent stake put up for sale by the state-run funds KAD and SOD, Slovene Press Agency reported on June 27th, cited by Reporter.gr. 
The buyer, which owned over 20 per cent prior to the bidding, paid 55.5 million Euro for the stake, at the starting price of 40 million Euro, it was reported. Port operator Luka Koper and investment firm Mercata also bid for the stake. KAD and SOD remain strategic owners of Splosna Plovba, keeping 25 per cent plus one share.

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TRANSPORT

DARS to construct 13 kilometre motorway 

DARS recently inked an 80.13 million Euro deal for the construction of a 12.9 kilometre motorway section between Slivnica and Drazenci, Slovene Press Agency reported on July 11th, cited by reporter.gr. 
The works have to be completed in 24 months, DARS was cited as saying. The companies constructing the section, SCT Ljubljana, Primorje Ajdovscina, Gradis skupina G Ljubljana, CPM Maribor, Vegrad Velenje and Strabag Austria, will construct three motorway exits, 10 flyovers and several other facilities, including a service area, it was reported. This is the last of three contracts for the section between Slivnica and Drazenci. DARS is a Slovenian motorway company.

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