VZCZCXRO2175
RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHBW #0469 1331821
ZNR UUUUU ZZH
R 121821Z MAY 08
FM AMEMBASSY BELGRADE
TO RUEHC/SECSTATE WASHDC 0280
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBW/AMEMBASSY BELGRADE 0393

UNCLAS BELGRADE 000469 
 
SIPDIS 
USDOC FOR 4232/ITA/MAC/EUR/OEERIS/SSAVICH 
 
E.O. 12958: N/A 
TAGS: ECON EINV EFIN SR
SUBJECT: SERBIA: MARKETS APPLAUD ELECTION RESULTS 
 
REF: BELGRADE 460 
 
Summary 
 
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¶1.  The Belgrade Stock Exchange reacted to the surprisingly wide 
Democratic Party coalition electoral margin over the 
second-ranked Radicals in the May 11 parliamentary elections 
with a record jump of 12.93% in primary shares index.  Brokers 
claim they "can not respond to such a huge number of purchase 
orders."  The dinar finally stopped its pre-election week slide 
of almost 4% and according to current, mid-day, trading results 
has strengthened against the Euro by 1.8%.  The market judged 
the election results as clearly very positive, opening a 
brighter future for Serbian economy.  End Summary. 
 
Indexes 13% Up, Brokers Flooded with Orders 
 
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¶2.  On May 12, the day after the pro-European coalition gathered 
around the Democratic Party (DS) received a shot in the arm at 
the polls over the Radical Party (SRS), though still not enough 
to form a government without some form of compromise coalition, 
financial markets jumped.  Despite the remaining uncertainties 
about what parties will make up a governing coalition, investors 
at the Belgrade Stock Exchange showed strong optimism and great 
confidence as demand skyrocketed and pushed the primary shares 
index Belex 15 to an unprecedented one day jump of 12.93%.  The 
Chair of the Board of broker M&V Investments Dragijana 
Radonjic-Petrovic told econoff that brokers had a hard time 
responding to the deluge of orders.  She added that this first 
spike would not last long, but she hoped the rising trend would 
continue after a year-long downward trend.  The markets 
anticipated the election outcome better than all of the 
pollsters, since the recovery started on May 8 in the wake of 
the Fiat deal (reftel) when the Belex 15 moved up 2.33% and 
continued on May 9 to move up 4.44%. 
 
Exchange Rate Slide Turns Around 
 
-------------------------------- 
 
¶4.  Growing confidence and positive investor expectations were 
also reflected in the dinar exchange rate.  During the week 
before the elections the dinar fell, but bank contacts told econ 
staff that the dinar's fall turned around following the May 11 
elections.  Following last week's depreciation of the dinar 
against the euro of almost 4%, one euro was trading for 83.87 
dinars.  According to Aleksandra Maksimovic, Corporate Sales 
Department Head at Raiffeisen Bank, the dinar was getting 
stronger in inter-banking trade and most likely the exchange 
rate on May 13 would be 82.4 dinars to the euro, a nearly 2% 
appreciation. 
 
Comment 
 
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¶5.  On the first post-election day investors in Serbian 
financial markets showed optimism and strong belief that the 
Serbian elections point to an economically profitable road. 
Many brokers believe that the still possible scenario of parties 
not committed to greater European integration forming a 
government was factored into shares prices long ago with the 
slide of the Belex 15 since the announcement of elections. 
Thus, the surprising margin for European-oriented parties led to 
a correction in share values.  Portfolio investors, most 
sensitive to risks, sent a message today that the elections 
signal a clear opportunity for Serbia to speed its path to 
prosperity and Europe.   End Comment. 
 
MUNTER