Latvia's capital market stagnates despite record bond issuance
Latvian companies raised more than €1.5 billion through bond issues last year, yet the stock market has stalled for years. The government's goal of reaching 9% of GDP in market capitalisation by 2027 will most likely be missed.
Latvia recorded a record level of corporate bond issuance last year, with companies raising more than €1.5 billion in capital this way. The stock market, however, has been stagnant for years, and money sitting in the accounts of residents and businesses is not earning the return it could get from investing in securities. The points were reported by Dienas Bizness, citing I. Tetere.
The government has set a target of stock market capitalisation reaching 9% of gross domestic product (GDP) in 2027. That goal will most likely not be met, as it would require capitalisation at least six times higher than today. It could be approached in theory only if the state dropped its long-standing prejudice against offering shares in state-owned companies on the stock exchange.
The Swedish example
The article points to neighbouring Sweden, home to one of Europe's most developed securities markets. It has more than 900 listed companies and market capitalisation of 194% of GDP, according to OECD data. Sweden is home to global brands such as Spotify and Volvo. About 10% of household financial assets are invested in investment funds and 7% in listed shares.
Governance of state companies
Tetere stresses that companies preparing for a stock exchange listing must change their thinking and governance, because investors put money where they see a clear development vision and responsible management. This year the state-owned company LAU Infra group, formerly Latvijas autoceļu uzturētājs (the Latvian road maintainer), listed its shares, but this is a rare exception, as public suspicion of "privatisation" persists.
Tetere notes that offering shares is not comparable to the sale of state property in the 1990s: private investors receive only part of a company's capital, while the company can develop more dynamically. Part of the pension second-pillar savings, which exceed €11 billion, could flow into the capital of companies important to Latvia.
She argues that a strong capital market cannot be built in a few years and depends on public trust. More active state involvement is therefore needed in educating people and in offering shares of valuable companies.
Capital market issues will be discussed on 5 November at the Baltic Capital Markets Conference 2026.
