Montenegro’s capital market turnover reached over €86 million in the most recent annual report, despite a significant decline in overall market capitalisation. This trend underscores the ongoing challenges faced by the country’s securities market, particularly when compared to its robust banking sector.
Data presented to parliament indicates that the total market value has almost halved, even as transaction volumes have generated substantial turnover. This situation highlights a persistent structural issue: while Montenegro possesses considerable household and corporate savings, only a fraction is invested in publicly traded shares and bonds.
The banking sector remains the predominant financial institution in Montenegro, with deposits surpassing €6 billion as of 2026. Bank lending continues to grow at double-digit annual rates, contrasting sharply with the relatively low trading activity on the Montenegro Stock Exchange, which is often limited to a few companies or large block transactions.
This lack of liquidity hinders the exchange’s effectiveness as a capital source for businesses. Companies seeking funding are more inclined to approach banks or foreign investors rather than utilize public markets for equity financing.
Low liquidity presents additional challenges for investors. Limited trading activity can lead to volatile price movements from small transactions, making it difficult for investors to buy or sell larger positions without impacting market prices. This situation discourages institutional investors, further exacerbating liquidity issues.
The capital market’s dynamics are influenced by ownership concentration among listed companies, many of which have controlling shareholders and minimal free floats available for trading. Some companies remain listed despite infrequent market activity, resulting in an inflated perception of available capital for investors.
The reported decline in market value must be evaluated alongside liquidity concerns. Although an annual turnover of €86 million might seem significant in a smaller economy, trading activity is often skewed by a handful of large transactions. Monthly data reflects this pattern, with specific companies representing a large portion of total trades.
The disparity between banking and capital markets is becoming increasingly evident as Montenegro moves closer to EU accession. Bank assets and deposits are growing, foreign banking entities remain active, and regulatory standards are aligning with European norms. In contrast, capital markets are developing at a slower pace, creating a financing imbalance.
While bank credit serves many companies efficiently, excessive reliance on banks limits options for long-term equity and growth financing. A more developed securities market could provide alternatives for sectors such as tourism, energy, and infrastructure that require expansion capital.
Currently, institutional demand for investment opportunities remains limited in Montenegro. Strengthening corporate governance and enhancing transparency could foster a more appealing environment for potential investors. Introducing partial listings of state-owned enterprises may also deepen the market by bringing larger companies into public view.
Furthermore, corporate bond issuance could offer another avenue for financing as Montenegro faces rising infrastructure and renewable energy investment demands. However, achieving this will necessitate building a larger base of investors.
The parliamentary review indicates that Montenegro is also enhancing its fiscal and regulatory frameworks. Lawmakers have approved a staffing framework comprising 12 positions for the Fiscal Council, while the energy regulator REGAGEN reported annual revenues exceeding €2 million. These initiatives aim to bolster independent institutions and regulatory oversight within the country.
However, regulation alone will not suffice to stimulate liquidity in the capital market. The primary challenge remains developing investable securities that attract investor interest. Montenegro has sufficient domestic savings to support an expanded capital market but lacks a diverse range of liquid companies and bonds alongside institutional investors capable of converting these savings into market-based corporate finance.
Until these conditions improve, the reported turnover figure of €86 million will continue to be overshadowed by the more pressing concern of declining market value amid the overwhelming dominance of banks in domestic financing channels.
