The CEOs of exchanges in the Visegrad Group countries (Poland, Czech Republic, Slovakia, Hungary), Croatia, Romania and Slovenia have signed a letter of intent concerning the publication of a new Three Seas region exchange index CEEplus. The launch of the index was officially announced in the presence of Minister of Investment and Economic Development Jerzy Kwieciński during the panel discussion “Development of a Joint Exchange Index of the Three Seas Region: Opportunities and Benefits” at the 29th Economic Forum in Krynica-Zdrój. The Warsaw Stock Exchange (GPW) will be responsible for the calculation and publication of the index.
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,” said Prime Minister Mateusz Morawiecki.
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,” said Jerzy Kwieciński, Minister for Investment and Development.
The index portfolio will include more than 100 of the most liquid stocks of companies listed on Central and Eastern European exchanges in Bratislava, Bucharest, Budapest, Ljubljana, Prague, Warsaw and Zagreb. Stocks participating in the index have to meet the liquidity criterion: average value of trading per session of at least EUR 90,000 in six months period. The participation of stocks in the index will depend on their free float and will be capped according to the 5/10/40 rule (i.e. participation of the biggest stock is capped at 10%, aggregate participation of stocks weighing more than 5% is capped at 40%). The participation of stocks from any single country in the index portfolio will be capped at 50% (in practice, the cap applies only to stocks listed on GPW).
The letter of intent concerning the new regional index is a part of the ongoing collaboration among the CEE region’s capital markets. The project will ensure that the CEE exchanges speak with a stronger voice across debates concerning EU capital markets. The initiative opens the European Union to a coherent position of the entire region.
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 new index will be published daily basing on closing prices converted at the exchange rate of the National Bank of Poland for local currencies, the euro, and the US dollar. CEEplus will be a price index and the underlying of a TFI PZU passive funds: inPZU CEEplus, yet another inPZU subfund of the umbrella fund inPZU SFIO. The fund with a suggested investment horizon of at least three years will be addressed to retail and professional clients and available on the inPZU platform.
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,” said Paweł Surówka, President of the PZU Group.
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.