How healthy are the capital markets of Estonia, Latvia and Lithuania at the end of 2026?

In this podcast two leading voices of the region’s financial world give a candid answer: okay, but it could be much better.

Kaarel Ots, CEO of Nasdaq Tallinn Stock Exchange, explains the key number. Listed equity and bonds divided by GDP stand at only 10 to 12 percent across the three countries, while a healthy market is usually considered to be around 50 percent. Is the region really four to five times behind? Ots asks listeners to be patient. The Baltics had no market economy for 50 years and have practised one for only 35, so the region is still playing catch up, and 50 percent is a good North Star.

What matters most is size. Index providers still classify the Baltics as a frontier market, a label that signals higher risk and keeps the region outside the flows of passive investment funds worth hundreds of millions of euros. To move up to emerging status, the region needs larger listed companies in Tallinn, Riga and Vilnius.

Roberts Idelsons, CEO of Signet Bank in Latvia, sees reasons for optimism. The bond market is booming, financial literacy is growing among investors and politicians alike.Because the state is the largest shareholder in many Latvian companies, Idelsons argues that governments should list their biggest businesses, with Latvenergo as the obvious candidate. This, he stresses, is not privatisation: the state can remain the majority owner while the company becomes better governed and more efficient. Ots agrees and points to Ignitis in Lithuania, Tallinna Sadam and Telia as proof that transparency pays off.

The guests also talk about the weaker IPOs of recent years and why they are no reason to panic. Do capital markets threaten banks? Idelsons says the opposite is true. Why are Baltic economies among the most bank dependent in Europe, and what did that mean in 2008? Why do fast growing companies choose bonds at 8 to 10 percent, and who actually buys them? The answers are in the conversation, along with a surprise about a recent Estonian government bond of one billion euros.

Households come under the spotlight as well. Estonians hold almost 15 billion euros in deposits and Latvians 11 to 12 billion, yet most people do not invest at all. What would change that? Idelsons points out the region`s taxation.

The episode ends with concrete advice for lawmakers: list the largest state owned companies, redesign personal income tax to reward investing, and write a plan that fits on one A4 page. And one more thing, together the three Baltic countries form a market of six million people, not 1.3 million. Listen to the full conversation to hear how the guests want to use that.

The podcast is hosted by Hando Sinisalu. The podcast is in English.

Source and the podcast episode: https://www.aripaev.ee/sisuturundus/2026/10/26/kui-heas-seisus-on-eesti-lati-ja-leedu-kapitaliturud-2026-aasta-lopus