Slovenia beats China as world's top market

Slovenia beats China as world's top market

The Slovenian Stock Exchange Index (SBI20) was the best-performing equity benchmark in the world last quarter, jumping 39 percent 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.

Slovenia started using the euro in January and its US$ 35bn economy expanded 7.2 percent 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 Slovenes' savings rose. Foreigners hold about five percent.

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 percent of Telekom Slovenije next month. That has helped increase the share price by 55 percent. 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.