Yasub: State May Take Away Shareholders’ Profits At Any Time

No one will play with swindlers in the purchase of shares of state-owned enterprises.

The authorities will not be able to revive the Belarusian market of securities with the help of the "National IPO" of the enterprises with state shares less than 25%.

On January 17, head of the department on the accounting and disposal of shares of the State Committee on Property Hanna Karnievich stated that Lukashenka's decree is ready, according to which it is planned to carry out the "People's IPO" of the enterprises with state shares less than 25% in Belarus.

"This is another way to bring in the citizens’ money to our enterprises, so that the people switch off from the exchange points and invest their savings in shares", – the head of department said.

Belaruspartisan.org asked senior analyst of the Alpari company Vadzim Yasub, what the "National IPO" is and whether it will be possible to use it to revitalize the securities market and to switch off Belarusians from the exchange points.

"IPO means initial public offering, when a company offers its shares to a wide range of buyers. In Belarus, there have been several attempts to create the so-called "People's IPO". The word "people’s" means that the company shares are distributed not only among several interested companies, but offered to a wide range of individuals. The first IPO was established at the Minsk plant of sparkling wine, which is touted as successful, even though after the sale of the shares to individuals (mainly among workers of this enterprise), they were bought by Chyzh’s structures. As a result, a wide range of owners did not emerge. Other attempts to carry out the "People's IPO" failed – only a very small proportion of the shares was sold ", – Yasub says.

According to the expert, another attempt to carry out the "People's IPO" is also doomed to failure within the existing circumstances. Though the desire to do something along here is commendable.

"It is very common around the world, when population possess shares of enterprises. This is good for the economy, for the companies themselves, because they are able to draw additional funds on the development, remaining independent in decision-making. But a reasonable question arises – what do people buy shares for? In developed countries, the purchase of shares generates income, either via dividends or via the sale of shares due to the growth of their market value on the stock exchange. In our conditions it is very difficult to sell the shares, as this market is not developed. It’s quite useless to count on dividends, too. The economy falls and the number of loss-making enterprises increases, so even if the company is profitable, even after it pays all the required taxes, the state may ask it to share additional profit. The state may also make it to send money to a "social" project – a construction of another Ice Palace, for example. It can add a non-core asset in the form of a collective farm, etc on the balance sheet. That is, even if the company is profitable – the shareholders shouldn’t count on those profits," – Yasub is sure.

Radical reforms of the entire economy can change the situation and revive the stock market.

"There are no easy and fast ways to revive the market. This is a very deep problem. Favorable economic and investment environment and sustainable economic growth are needed. It is impossible to build a developed and interesting for investors stock market in a country with lousy investment climate, where the economy is falling for the third year in a row, where there is no protection of property rights," – the expert believes.