Matko Maravić: Small investors will be the biggest driver of capital market development

The domestic capital market is experiencing a new youth. After several years of stagnation, important IPOs have followed, liquidity is increasing, and small investors are rediscovering the stock exchange as a serious alternative to traditional savings in banks and real estate. We discussed these positive trends, as well as the obstacles that still need to be overcome for Croatia to achieve the status of an emerging market, with Matko Maravić, the CEO of Intercapital and the Chairman of the Supervisory Board of the Zagreb Stock Exchange.

Last year was quite active in the domestic capital market. We had important IPOs, and this year a secondary offering of Bosqar’s shares. How do you assess the state of the domestic capital market?

– The exceptionally positive trend continues. We have seen more new public offerings in the last year and a half, accompanied by a strong market growth of approximately 24 percent in the last 12 months; just in the first half of this year, we have a 130 percent higher turnover compared to last year. Of course, we are pleased that small investors have also joined the market, thanks to new listings, and that they have recognized the Zagreb Stock Exchange as an attractive place for investment. Not just Zagreb, but the stock exchange in general as a way of saving and investing. It is extremely important that all these IPOs and SPOs had a so-called tranche for small investors, unlike some previous ones that only had institutional investors. We support this implementation model because it is necessary to have small investors for both the company raising capital on the stock exchange and for the development of the market and liquidity. Therefore, I assess both the Croatian market and the region very positively.

Do you think the positive trend will continue?

– I believe it will. I think companies have recognized the stock exchange as a means of financing, and the strategic framework that the state has adopted contributes to this. There will be increasing investments aimed at promoting the market, so I expect companies to start raising capital on the stock exchange much more than they did before.

What about Intercapital? Has this market momentum also affected the increase in the number of your clients?

– Absolutely. We have invested significantly in new businesses over the past few years, especially in ETFs and Genius. If we look at ETFs, we have expanded our range to a total of four markets, so we now cover Croatia, Romania, Slovenia, and recently Poland as part of the ETF listed on the ZSE. From that perspective, we see a rapidly growing number of clients. In the last year, we have increased their number by 100 percent and reached 200 million euros under management. As investment products are increasingly in demand, the Genius application has attracted more than 15,000 clients who invest in domestic and global markets through this simple channel. One of the key reasons for the increased interest is significant investment in financial literacy and low bank interest rates. Additionally, inflation remains an important topic, so investors are looking for alternatives to ‘traditional’ investments such as deposits, term deposits, or real estate purchases.

What would you cite as the biggest obstacle to the future development of the domestic capital market? Is it the lack of quality companies for going public, lack of interest, or the regulatory framework?

– The regulatory framework is very good; I see no obstacle there. Croatia wants to achieve the status of an emerging market. This is an ambitious goal that has a long way to go, and all actors must contribute to it. The status of an emerging market would ensure that significantly more foreign investors place Croatia on their investment map, which would result in significantly greater liquidity in the domestic market. To achieve this status, a series of initiatives is needed, of which, in my opinion, one of the key ones is the implementation of at least one IPO with a large market capitalization and free float. Many small IPOs are a good path for the development of the domestic market, and we support it, but it alone is not sufficient to obtain the status of an emerging market.

Do we have such companies?

– We do; it will just take a little time and quality advisors to decide to raise capital on the Zagreb Stock Exchange rather than somewhere abroad. And that is not simple, as all global exchanges are competing to attract issuers to their markets. Therefore, we must work on making the Exchange increasingly liquid and better so that in five or ten years, such companies decide to finance ‘at home’.

The government launched an initiative for regional integration of capital markets last year. How could this project change Croatia’s position?

– We welcome this integration. It is a good direction and fits into the strategic framework for the development of the capital market. So, the first steps have been taken. This entire process should ensure that brokerage houses and members on all these exchanges can more easily access other ‘integrated’ markets and present them to their clients. This will inevitably increase liquidity. Integration takes time because setting up the infrastructure is an extremely demanding process. I believe that some initial initiatives from this cooperation can come to life in a reasonably short time.

You operate in Croatia, Slovenia, Romania, and recently in Hungary. What are the motives for such regional expansion?

– We set regional integration as our strategic goal long ago. Each of these countries is relatively small, and most of our regional clients in the brokerage segment are institutional investors. We have been a long-term partner of Auerbach Grayson for Croatia and Slovenia, and we recognized early on that we need to offer foreign investors a broader region to attract larger names and interest them. That is why we started with Slovenia, continued with Romania, and Hungary is the latest. We intend to continue down this path and perhaps add at least one more country in the next year.

What can we learn from countries that are more successful in this regard?

– Each country in the region has some positive case from which we can learn something. Romania, for example, had the largest IPO in this part of Europe. The reason for this is the Fondul Proprietatea, a fund into which the state introduced minority positions of its large infrastructure companies more than fifteen years ago. It hired a professional foreign manager, improved corporate governance, and listed the fund on the stock exchanges in Romania and London. This move put Romania on the map of emerging market funds. Poland, on the other hand, has a developed market and a much larger economy. It introduced PPK, a kind of third pension pillar that employers were required to contribute to for employees, and part of those funds was directed to the domestic market, which was a strong incentive for local population participation. As for Hungary, it introduced investment accounts early on as the most tax-efficient way of long-term savings.

Yes, and investment accounts will soon be introduced in Croatia as well. How will this affect investors?

– Extremely positively. The intention is for people to use the capital market within these accounts as a form of long-term savings, contributing whatever they can each month, and for there to be a model that will facilitate this and be more tax-efficient. Our Genius service has shown that there is strong interest in investing, so I believe that the introduction of the investment account and accompanying investments in financial literacy will further encourage citizens to actively engage in the capital market.

How much do you invest in financial literacy?

– We invest a lot in education through the Genius application, workshops, blogs, and conferences. We also have the IC Academy, where we organize lectures by our experts for the best students. Our goal is to bring young people closer to the financial industry, impart practical knowledge, and provide experiences that will help them in their first professional steps. Many of our people started this way, as students, and over the years developed with the company. We are also working on the ‘Investment Weekend’, which is an opportunity to bring a wider audience, including those who may not have basic knowledge of investing, closer to what investing actually means and what opportunities it can open for them.

How do you view the global market? This year, the most anticipated IPO has taken place, and the listings of companies like Anthropic and OpenAI are expected. Should domestic investors look at such companies?

– Yes, I think technology and artificial intelligence are sectors from which the most growth is coming, so it is worth investing in them. Not necessarily directly, but as part of sector ETFs. Stocks related to artificial intelligence are at the beginning of their lifecycle, and I do not know who will be the long-term winner, but I believe this sector will change everyday business, the way we work, live, and invest. The tools from Anthropic and OpenAI are a revolution in themselves, which is why we, like, I believe, most companies, have already integrated artificial intelligence into certain business processes and analyses. I understand that for most of the domestic public, the valuations of these global IT companies seem ‘crazy’ or expensive. One reason is that historically, we have not had such stocks with high growth potential in the domestic market, but that is changing. An example is the stock of Končar, which is strongly moving towards IT sector investments and AI infrastructure. Other industries represented on the ZSE are primarily stable and long-term, such as tourism and the food industry, so from the current perspective, that is the traditional world. Both worlds should be in the portfolio.

In Croatia, we have only one IT company on the stock exchange, Span. Do you expect the arrival of others?

– I expect that there will be more over time. The IT industry is an extremely attractive niche with many strategic investors and funds. We see that owners are more often opting for sales or mergers rather than going public, but I look forward to and expect that over time, someone else from that sector will come to the domestic stock exchange.

Looking ahead five to ten years, what will be the biggest driver of capital market development in Croatia and the region?

– Small investors. I expect that thanks to investment accounts, many more citizens will educate themselves and engage in the market, leading to a more liquid stock exchange and easier implementation of IPOs. I believe that over time, citizens’ capital will be significantly more directed towards the capital market and that it will become the primary address for investment. Furthermore, the entry of regional countries into the status of emerging markets brings a number of new international investors who will, by definition, have to be invested there, which will provide an additional boost to liquidity growth and market advancement.