Austria bourse fears new EU tax will sap trade

By Georgina Prodhan

VIENNA, Oct 9 (Reuters) - Vienna's stock exchange said onTuesday it feared losing even more trade as a result of a tax onfinancial transactions set to be introduced in Austria and someother euro zone countries.

Eleven euro zone countries agreed on Tuesday to push aheadwith the tax in a breakthrough for an initiative that has beenpushed hard by Germany and France but opposed by several otherEuropean Union countries.

"Of course we are not happy with this tax," a Vienna StockExchange spokeswoman said. "We're afraid that trade will move toother exchanges that have not introduced the tax. We will have atwo-class system in the European Union."

Imposing the charge on financial deals is symbolicallyimportant in showing that European policymakers are tackling anindustry blamed for triggering economic turmoil and which shouldhelp to pay to fix the crisis.

But it is deeply divisive.

Sweden - which is in the EU but outside the single currencyzone - is a vocal opponent of a tax that it attempted to imposein the 1980s, only to see much of its trading shift to London atheavy cost.

Walter Rothensteiner, chief executive of RaiffeisenZentralbank and one of Austria's top bankers, said itwould be better to roll out such a tax across the board.

"It would be desirable to introduce this globally to avoiddisadvantaging the countries in which the financial transactiontax should apply," he said.

Austria has already seen two-thirds of the volume that oncetraded on the prime segment of the main stock exchange disappearto alternative electronic platforms, over-the-counter networksand rival exchanges such as Warsaw in the last five years.

Between 2007 and 2011, annual share trading volume on thebourse fell to 30 billion euros ($39 billion) from 88 billion,and the first half of 2012 saw just 10 billion euros traded.

Economist Werner Hoffmann, author of a study of the Austriancapital market published on Tuesday, said poor liquidity, a moveby investors eastwards to other exchanges, and bureaucracy - aswell as the global downturn - are to blame.

Of Austria's top 20 companies, just one - brickmakerWienerberger - has a 100 percent free float, and halfhave a free float of under 50 percent.

"It's no surprise that companies don't want to join a marketthat's on a downwards trend," said Hoffmann, who runs managementconsultancy Contrast and is also a university professor.

He warned that Austrian economic growth, seen by researchersat 0.6-0.9 percent this year, could be crimped if capitalmarkets do not improve and tougher capital rules restrict banklending that has traditionally funded much investment.

While rivals including Deutsche Boerse , theLondon Stock Exchange and in particular the Warsaw StockExchange have stabilised or increased their tradingvolumes since 2009, Vienna has continued its downwards trend.

Just six companies have listed on the Vienna exchange since2008, and none has done so this year. In Warsaw, 26 companieslisted last quarter alone.($1 = 0.7711 euros)

(Editing by David Cowell)

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