Prague Stock Exchange (PSE)

What Is the Prague Stock Exchange (PSE)?

The Prague Stock Exchange is the oldest and most prominent stock exchange in the Czech Republic. The Prague Stock Exchange is located in the city of Prague and was reopened in 1993 after a nearly 50-year hiatus as a result of World War II during the rule of the communist government of Czechoslovakia from 1948.

Key Takeaways

  • The Prague Stock Exchange is the premier stock exchange for the Czech Republic, listing more than 1,000 of the country's publicly traded shares.
  • The exchange was found in 1871 where it was initially billed as a commodities exchange.
  • The Prague exchange was shuttered in 1948, following WWII, and did not re-open until the year 1993.

Understanding the Prague Stock Exchange

The Prague Stock Exchange was founded in 1871, when Prague and the modern-day Czech Republic were constituents of the Austro-Hungarian Empire. The Prague exchange was at first a key institution in the global trade of sugar, and many sugar-related commodities such as molasses that had major operations in or around the city of Prague. The exchange evolved over the decades, however, to ultimately deal mostly in stocks of public companies, and by World War I, the Prague Stock Exchange was a venue solely for the trading of stocks.

After the fall of the Berlin Wall and the collapse of communist regimes, financial capitalism quickly spread to places like Prague. The Prague Stock Exchange was soon reopened, and the first post-communist trades were made on April 6th, 1993. The exchange was an important vehicle for privatizing the more than 1,000 state-owned companies that shifted to private hands in the years following the fall of the Czech communist government.

Today, the Prague Stock Exchange lists hundreds of the Czech Republic’s most important companies, and the overall performance of companies listed on the exchange can be measured with the PX index, its official stock index. Skoda Automotive, which brings in close to $20 billion in annual revenue, is listed on the Prague Stock exchange, along with other major Czech companies like Unipetrol and the CEZ group. Many well known financial services firms are members of the Prague Stock Exchange, like Société Générale.

The Prague Stock Exchange and the Modern Economy

The Prague Stock Exchange is an important institution for the modern Czech economy, as the Czech Republic is home to many capital-intensive industries such as high tech engineering, automotive manufacturing, steel production, and pharmaceuticals. Such industries require a lot of capital to thrive, and the Prague Stock Exchange serves as a means for Czech companies to find investors to finance these projects.

The exchange is a privately owned joint-stock company, with CEE Stock Exchange Group owning 93 percent. CEE Stock Exchange Group is a holding company that owns and controls both the Prague Stock Exchange and the Vienna Stock Exchange in Austria. Though the holding company is the strategic owner and financial backer of both exchanges, each exchange is operated separately by in-house management.

Shares on the Prague exchange are denominated in Czeck koruna (CZK), the official currency of the Czech Reupublic. The Czech Republic is part of the European Union (EU) and so is legally bound to adopt the common euro currency eventually, although this does not appear to be imminent.

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