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Croatia - Stock Exchange History, Revival of Exchange Trading

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The Croatian Stock Exchange or the Zagreb Croatian Stock Exchange, as named after the capital of the country, had many ups and downs from its first establishment in 1907. A very dynamic history and political position of the country had a major impact on the Stock Exchange. Let us look back into the historical events and the change of governments in Croatia which shaped the Stock Market.

The Roots of the Zagreb Stock Exchange

Since Croatia was under the rule of the powerful Habsburg Monarchy, the first Monarchy’s stock exchange was opened in Rijeka, the Croatian main refinery center from 1750 to 1803. The exchange market was of course controlled by the Austro-Hungarian government even if Croatia had certain liberties to act independently in other areas, economy and stocks were not one of them.

After the split of the Monarchy into Austria and Hungary in 1867, authority over Croatia was divided between the two. Nevertheless, Croatia sought for more independence and established the Association of Industrialists and Merchants of Croatia and Slavonia as an additional but independent economic department. The Association gave rise to the establishment of the Commodities and Valuables Division in 1907 which represented the birth of the Croatian Stock Market.

The exchange market operated steadily until it was closed in 1911 just 1 year before the Balkans war and 3 years before WWI. This decision was made by shifting the market operations to the newly formed Southern Slavic country with the financial center of Belgrade. A mixed Croatian and Serbian coalition decided to close down the Commodities and Valuables Division and transfer it to Belgrade.

First Revival of the Exchange

In 1917, Croatia secretly made plans to revive or gain back its market, but due to WWI, the Croatian government had to postpone that idea, and finally, in 1919 the Zagreb Stock Exchange was reopened in a completely new political setting, where Croatia became part of the State of Slovenes, Croats, and Serbs (SHS).

During that period, the National Bank of Croatia was also established, which indicates that the market was developing steadily. Croatia had also to deal with permit issuances, which the Serbian government delayed for a long period. The Croatian stock market cooperated with the Belgrade Exchange and was heavily influenced by events in Serbia.

Nevertheless, the stock market had a flourishing period at that time by being recognized as an international financial center, especially because it cooperated with Prague and Vienna enhancing the Croatian banking system and the economic development.

The stock market had to deal with restrictions which limited exports, consequently weakening the stock exchange. The newly formed SHS National Bank in Belgrade took over a big deal of operations affecting negatively the Croatian Stock Exchange, as well as the monopolized currency policies imposed by Belgrade.

Croatian ministers tried to draft and propose new laws which would be more liberal and protect the interests of the Croatian market. They managed to do so in the 1930s, but yet, it turned out that the adopted laws were even worse and imposed more limitations. The Exchange Market managed to survive somehow until 1945 when it was closed under the socialist regime (the new governmental structure after WWII). Its last years were very dim and hard. The Exchange Market remained closed until Croatia’s independence in 1991.

The Comeback of the Croatian Stock Exchange

croatia in european union

In 1991, Croatia finally parted from Yugoslavia and opened again its Stock Exchange. This time, 25 banks and 2 insurance companies reopened the market. Since then on, even during the war (1991-1995), the Zagreb Stock Exchange remained active and gained more and more participants and companies.

The stock market was additionally spurred by the introduction of the electronic trading system which facilitated trading and cooperation on an international level. Member brokers all over the country could trade easily without having to travel to Zagreb. The same was true for international traders. From 1994/95 to 2000, the capitalization of the market grew astonishingly fast (i.e. 10 times).

The Zagreb Stock Exchange assumed an important role in international cooperation as a member of the Federation of Euro-Asian Stock Exchanges and the Federation of European Stock Exchanges.

The economy and the stock market were affected by the global financial crisis in 2007/2008. The Stock Exchange recorded a significant drop, but it is still very steady and enjoys a great reputation in the international community. Since 2013, Croatia is a member of the EU, which also influenced the Stock Exchange by opening new doors and access to new EU markets. Croatia has slightly recovered from the recession (and is still recovering), and the country is the regional leader in terms of economic development and the Stock Market.