Following Slovenia's separation from the Yugoslavian federation, the larger partner assumed all Slovenia's debt. So Slovenia began life as an independent state with a little industry and no debt. The government successfully issued bonds in 1996 in a deal managed by J P Morgan. The bonds are listed on the Luxembourg stock exchange.

Slovenia has ratified the association agreement with the EU, although domestic commentators predict a rough ride for the economy and some tough decisions for the Central Bank.

It is a new market but there has already been a high degree of foreign participation. Trading on the Lubljana Stock Exchange began in 1990. There was initially significant interest in buying Slovenian assets; so much so that in 1997, the Government had to call a halt to foreign buying to stabilise the currency, the Tolar.

There are less than 30 listed stocks so investment possibilities for foreign portfolio managers are limited and there is poor liquidity. Interest from foreign investment funds seems to have increased significantly in recent months, and some funds have a surprisingly high proportion of their assets invested in this tiny market.

Of funds tracked by Forsyth Partners, the highest weightings held in Slovenian stocks are by Mercury (10.3% of a DM590m fund), CS First Boston (7.2% of $286m), Framlington (4% of $18m) Jupiter Tyndall (3% of $3.75m) and Templeton (2% of $7.4m).

According to Micropal's latest emerging markets survey, Slovenia was the seventh most popular of all east European emerging markets in May.

The central bank now allows foreigners to buy Slovenian securities without balancing foreign exchange position for the amount invested. However they have to undertake the obligation not to sell the securities within seven years.

Domestic investment funds have only been introduced during 1998. The first two to be launched had the enticing names Kompas sklad 1 d.d. and Kompas sklad 2 d.d. Richard Newell