SOFIA (Reuters) – The global credit crunch has dashed hopes that Bulgaria’s fledgling bourse would shortly catch up with better-performing Eastern European markets, but it could resume its revival later this year, analysts say.

The capitalization of the Balkan country’s bourse almost doubled to nearly –15 billion last year, driven by rising investor confidence after Bulgaria joined the European Union, though volumes remained small.

The sharp growth seen at the end of last year was quickly wiped out by the global financial crisis. The exchange lost –2 billion in January, and its capitalization is now half that of the more developed Slovenian bourse.

The blue chip SOFIX index plunged over 30 percent in January to a low of 1,233 points, erasing almost all of last year’s gains. It has since recovered to over 1,400 points.

After a month without any initial public offerings, companies are now slowly testing the water, but analysts revised down forecasts for the number of new IPOs this year. They had initially hoped that IPOs would double in 2008 from 11 last year. The exchange had four IPOs in 2006 in comparison.

“Companies will not be able to hit the desired price for the stocks they will offer. The demand is slowing as investors fear losses,” said Vladislav Panev from brokerage Status Capital.

Funds’ net assets dropped by 11 percent to 739 million levs ($556 million) in January as many investors withdrew. The global financial turmoil and rising inflation at home are signaling that 2008 will not match last year’s returns.

Still, analysts expect some recovery in the second half of the year, saying cuts in corporate taxes, along with expected inflows of EU funds and Bulgaria’s economic stability, should lure investors back.

Bulgarian bourse volumes are only about –2 million a day.