Stock Markets in Transition Economies

Abstract

Stock markets in transition economies are generally underdeveloped, with low market capitalization and turnover, even when compared to most emerging markets. Poor macro-conditions, weak legal protection for minority shareholders and limited development of institutional investors have impeded their development. While stock markets can be expected to grow in most transition economies, their scale will remain small relative to world stock markets. Furthermore, many corporations from transition economies are already raising funds and listing their shares abroad. Also given global stock market consolidation, this suggests that most transition economies are best off integrating their markets with those abroad.