BELGRADE -Serbia’s nascent fund industry has seen share prices sliding for months since peaking in May, but it may be ripe for an upturn after the bear run left prices attractive, fund managers and analysts said yesterday. This year has been tough on many of the seven voluntary pension funds and four investment funds that began operation in 2007. Continuing political uncertainty and fears of violence if Serbia’s breakaway Kosovo province declares independence have helped sour investor sentiment and kept liquidity away from many stocks even though analysts say fundamentals are solid. «The current market situation offers a good opportunity to buy, especially blue chips,» said Dusan Lahe, chairman of KD Investments, the Belgrade arm of Slovenian KD Group. «Business results of many Serbian companies have improved and there is no indication that the bearish market could last too much longer,» he said. Serb funds manage a total of around -100 million of assets and had expected double-digit returns after the market posted strong gains in the first quarter. But months of constant market decline meant some funds were in the red. «We have been struggling with the negative trend since May,» Nevenka Micanovic of Fima Invest fund manager told Reuters. «Solid business performance and liquidity no longer guarantee that share prices will rise,» she said. The main index of the 15 most actively traded shares on the Belgrade bourse has lost a third of its value since May, dampening hopes of small investors who had watched the market rise by some 70 percent in the first quarter before the downturn. Nonetheless, the market is still up about 30 percent on the year, and Dragoslav Velickovic, the head of the brokerage unit at Societe Generale bank, said small investors should remain calm and forget about returns of 50 to 100 percent in a year. «Many Serb companies expect better results, but political risk remains. Serb firms do hardly any business with Kosovo and its independence cannot hurt their business results,» he said. Despite a strong Serb economy, market gloom has swept across much of the Balkans partly due to falling risk appetite among foreign investors hit by a global credit crunch, said Mario Gatara, a market analyst for the Seebiz.eu business news portal. «A complete lack of buying appetite in October and November simply reminded small investors how reliant local markets are on institutional investors,» Gatara said. He said institutional investors would probably start to return to the region in 2008, wooed by new share issues, even though the Kosovo situation weighed on the minds of some. KD’s Lahe said it was the region’s path toward the EU and privatizations of big public companies that would attract funds. But institutional investors are also looking for looser rules, allowing them more cross-border diversification, Lahe said.