Croatia has money, liquidity and access to European capital. So why does its stock market still feel small?
Croatia’s financial system is not short of capital. Pension funds now manage billions in long-term assets, banks remain highly liquid, and European funding continues to flow steadily into the economy. On paper, the conditions for a stronger equity market appear to be in place.
Yet the Zagreb Stock Exchange still feels modest compared to larger Central European markets. Liquidity remains relatively shallow, retail participation limited, and many of the region’s most ambitious companies continue to favour private ownership, bank financing or strategic partnerships over public listings.
The contrast becomes even more visible when compared with exchanges such as Warsaw or Vienna, which spent years building broader investor cultures, attracting larger listings and positioning themselves more aggressively before international capital. Much of the Adria region, by comparison, still operates within a more conservative financial instinct — one where debt often feels safer than dilution, ownership is guarded carefully, and transparency is frequently viewed as obligation before opportunity.
That mindset has shaped not only Croatia’s market, but much of the wider regional investment landscape.
Capital increasingly moves across borders, yet investor psychology often does not. Exchanges cooperate technically, infrastructure improves, and integration advances operationally, but markets themselves still tend to behave nationally.
For Ivana Gažić, President of the Management Board of the Zagreb Stock Exchange, the central challenge is therefore not simply financial. It is structural, cultural and generational at the same time. In conversation with The Region, she discusses why many companies still avoid public listings, whether pension funds stabilise the market at the expense of dynamism, and why the future of Adria’s capital markets may depend less on liquidity itself than on a broader willingness to rethink control, transparency and regional scale.
CAPITAL IS FLOWING.
EQUITY MARKETS ARE NOT
Croatia has access to capital, from EU funds to institutional investors, yet its stock market remains relatively shallow. Where does the disconnect come from?
The disconnect is not primarily about a lack of capital, but about how capital is allocated and how companies perceive equity financing. Croatia has a strong banking tradition and a conservative corporate financing culture where debt remains the dominant source of funding.
Equity markets require a different mindset: openness, transparency and a willingness to share ownership and decision-making with external investors. For many companies, particularly family-owned or closely held businesses, this shift is still viewed as a major structural change rather than simply another financing option.
Retail investor participation also remains relatively low. Although financial literacy and digital access to markets have improved, equity investing is still not deeply embedded in household behaviour. Savings continue to be concentrated in deposits and real estate, limiting the depth of the domestic investor base.
The result is a market that still appears shallow in liquidity and depth, despite the capital available within the broader financial system.
“The constraint is not the absence of money, but the channels, incentives and institutional preferences that determine how that capital is transformed into equity market activity.”
THE TRANSPARENCY BARRIER
While regional companies continue to expand internationally, relatively few choose public listings as their primary growth strategy, often relying instead on bank financing, private ownership structures or strategic partnerships.
Many Croatian companies still avoid public listings. Is this a question of market structure, regulation, or a deeper reluctance toward transparency and shared ownership?
Listing requires scale, governance readiness and a willingness to accept market discipline. Many Croatian companies are family-owned or closely held, where retaining control remains a priority.
From a regulatory perspective, listing requirements are not prohibitive, but compliance and reporting obligations are still perceived as burdensome.
However, the deeper issue is reluctance toward transparency and external scrutiny, which remains characteristic of many emerging markets.
At the same time, positive developments are emerging. Last year, Croatia had three IPOs whose value surpassed some prominent global markets, and all three were oversubscribed. We have also invested heavily in education around investor relations and helped create professionals capable of communicating more confidently with investors and the market.
“Public markets require a shift from ownership control to shared governance and accountability.”
WHY LIQUIDITY
STILL FEELS NATIONAL
Zagreb Stock Exchange owns Ljubljana Stock Exchange. What has that integration actually changed, and what still has not happened that should have?
The integration has primarily delivered operational consolidation, cost efficiencies and improved coordination in market infrastructure and listing frameworks. It has also strengthened regional visibility and enabled better alignment of certain trading and post-trading processes.
The most realistic outcome is a networked regional market rather than a single market
However, what has not fully materialised is a truly integrated liquidity pool and investor base. Cross-border investing is still perceived as “foreign” rather than domestic within the group structure, while liquidity itself remains fragmented.
The next step should be deeper harmonisation of product offerings, a more unified issuer strategy and simpler investor access across the region.
CAN ADRIA THINK REGIONALLY
ABOUT CAPITAL?
The fragmentation Gažić describes remains visible across much of the region. While capital increasingly moves across borders, investor psychology often still does not. Exchanges cooperate technically, but markets continue to behave nationally.
If you look at the region today, is a truly integrated Adria capital market realistic, or are national markets likely to remain fragmented?
Full integration in the sense of a single unified market is unlikely in the near term due to regulatory sovereignty, taxation differences and national institutional frameworks.
However, a functionally integrated Adria market is realistic and already partially underway. That means harmonised trading access, shared infrastructure, cross-listings and improved investor mobility, even if legal entities and exchanges remain separate.
The most realistic outcome is a networked regional market rather than a single market — one where fragmentation is gradually reduced through interoperability rather than formal unification.
STABILITY VS DYNAMISM
Pension funds play a dominant role in Croatia’s financial system. Do they provide stability at the cost of dynamism, and how does that shape the development of the equity market?
Pension funds are a critical stabilising force within the Croatian capital market. They provide long-term capital, reduce volatility and ensure a consistent domestic institutional investor base.
THE BIGGER QUESTION
The broader challenge for the region may ultimately have less to do with liquidity than confidence itself. Capital exists across the Adria market. The question is whether enough companies are prepared to exchange control for scale — and whether regional investors are finally ready to think beyond national borders.
At the same time, their size and investment mandates naturally lead toward more conservative allocation strategies focused on liquidity, dividend yield and lower-risk profiles. That can limit the development of higher-risk growth capital within the domestic equity market.
In that sense, stability is high, but dynamism is somewhat constrained. The challenge is not the role pension funds play, but ensuring a broader ecosystem of investors capable of complementing that stability with greater market ambition and growth-oriented capital.
WHY LISTING AT HOME
STILL MATTERS
If a major Croatian company were deciding today whether to list in Zagreb, Vienna, or elsewhere, what would be the strongest argument for keeping that listing at home?
The strongest argument is market proximity combined with institutional understanding.
Listing domestically means better alignment with local investors, analysts and media, as well as stronger visibility among retail and institutional investors who understand the company’s operating environment. It also contributes directly to the development of the local capital market ecosystem.
From a practical standpoint, Zagreb Stock Exchange offers lower listing complexity, strong regulatory familiarity and growing regional integration, which increasingly reduces the need to go abroad for visibility or liquidity.
Ultimately, the strongest argument for listing at home is not only financial — it is strategic positioning within the domestic and regional economic narrative.
