SOFIA (Reuters) – Bulgaria’s fledgling bourse defied a global slump and soared by 130 percent in the last 18 months, but analysts said the boom is more due to government prop-up measures than investors’ interest. Set up in 1997, post-communist Bulgaria’s stock exchange has risen despite no new listings last year, a dearth of foreign investors and daily volumes between just $100,000 and $1 million. «The rise in the stock index last year does not reflect the country’s good macroeconomic results. It’s purely based on expectations… and administrative measures,» Apostol Apostolov, chairman of the board of directors, told Reuters. «The financial market in the country, including the stock exchange, is still in embryo,» he added. The government’s economic team of young, Western-educated former bankers, who are determined to bring Bulgaria into the European Union by 2007, have set breathing fresh life into the bourse among their economic priorities. The government, which took over in July 2001, introduced a zero tax on capital gains and amended laws to give more protection to small shareholders and make the activity of public companies more transparent. It also allowed instruments intended to compensate pro-communist owners of land and other assets, to be traded on the stock market and used for buying shares in state companies due to be sold on the bourse. All eyes on state stakes But critics say the government has so far failed to deliver on its main pledge to quickly list minority stakes in lucrative state firms, such as telecoms monopoly BTC, tobacco monopoly Bulgartabak and maritime and river shipping firms. «The main problem of the bourse is that there is nothing to trade, apart from some four or five companies. The only chance to attract some fresh foreign capital is to offer these state companies,» said Radoslav Radev of local broker Bulbrokers. The privatization of majority stakes in BTC and Bulgartabak have stumbled on legal problems, while legislative changes needed to turn state companies into public companies are blocked in Parliament over a dispute whether to sell some of them at all. Brokers say the absence of attractive companies and excessive bureaucracy put investors off. Out of 380 companies listed, only around 30 are traded regularly. They also said the government had so far failed to encourage private companies to go public. «There is only stick and no carrot; lots of requirements, fines and bureaucracy, and no tax or other administrative stimuli,» said Radev.