TIRANA, Jan. 26 – The country’s highest financial authorities have warned Albanians to be careful with online trading in international stock exchanges, describing such investments as highly risky, especially if offered by unlicensed operators and used by investors lacking appropriate knowledge.
The appeal came on Tuesday after a meeting of the country’s Financial Stability Advisory Group which includes the country’s central bank governor, the finance minister, the head of the Financial Supervisory Authority and the director of the Deposit Insurance Agency.
“Online trading portals give the interested people the opportunity to invest in international stock exchanges. These investments are of considerable risk and that is why the Financial Stability Advisory Group estimates that the interested public should be careful and carry them out only through licensed operators based on full information and only in cases when there is the necessary financial knowledge allowing the acquaintance and awareness regarding the risks accompanying these activities,” said the watchdog.
Local media say potential investors are being lured through phone calls and aggressive marketing campaigns at a time when only three brokers have been licensed by the Financial Supervisory Authority and the Bank of Albania to offer such services.
“Open a forex (foreign exchange) trading account today and get an instant 100 percent bonus,” says an unlicensed forex trading broker in Albania on its website.
The country’s highest financial authorities advise investors to consult operators licensed by the Financial Supervisory Authority and the central bank on their respective websites and obtain information on risks before deciding to invest.
“Unlicensed and unsupervised activities expose investors to hidden costs and other obligations, which in the case of lack of transparency by the intermediary operator could even be higher,” said the watchdog in a statement.
With the economy struggling with poor growth rates of slightly above 2 percent and interest rates at a historic low, investment opportunities for Albanian savers have considerably reduced, turning them to risky investments such as informal lending and online stock trading.
Economy experts have recently appealed that the government should work on improving the business climate and reactivate the Tirana Stock Exchange which closed down last year after more than a decade of inefficiency.
Zef Preà§i, an economy expert, says there is a tendency of an increase in high-risk informal lending and illegal activities such as investments in online stock exchanges.
Investments in real estate and in the newly established investment funds are suggested as new opportunities.
While traditional bank deposits struggle to remain at positive growth rates due to a sharp cut in interest rates, the emerging investment funds continue registering moderate growth rates fueled by more favorable interest rates although at slower pace compared the boom following their establishment in 2012.
Deposits grew by only 1.5 percent year-on-year in November 2015 when average interest rates for lek-denominated savings dropped to 1.33 percent, down from 1.6 percent in November 2014, and 2.5 percent a year earlier.
Meanwhile, lending failed to return to positive growth rates for the fourth month in a row last November when it contracted by 2.2 percent year-on-year.
Tight lending standards because of non-performing loans standing at 20 percent and poor demand for new loans have contributed to the situation.
Interest rates on both lek and euro-denominated loans at historical lows are also proving inefficient to fuel demand on new loans.
Average interest rates on lek-denominated loans dropped to a historic low of 7.4 percent last November, when the central bank cut the key rate by another 0.25 percent to all-time low of 1.75 percent.
The loan rates in the national currency, although considerably lower compared to the pre-crisis period, are still considered high and unaffordable by the business community because of being six times higher compared to the deposit rates which have dropped below the average inflation rate for the past year.
