Over the past couple of months, the world's largest investment fund — the $2 trillion Norwegian Oil Fund — has liquidated most of its portfolio on the Nasdaq Tallinn stock exchange. At the current pace, it will soon be completely gone.

According to Joakim Helenius, head of Trigon Capital, which intermediates the Norwegian fund's investments in Tallinn, this is part of a broader trend. "Foreign investors have been pulling money out of the Estonian stock market for several years now and no new foreign investors are coming in. Unfortunately, the Estonian exchange has increasingly become the domain of Estonian citizens," he said.

That's one reason why the share prices of listed companies have stagnated in recent years. Helenius says the Tallinn exchange lacks the kind of high-growth stocks that typically attract international investors to small markets. Estonia's economy has been in stagnation for four years, geopolitical tensions are discouraging investment and, ultimately, the Tallinn exchange is just too small.

"To even see what's happening on our exchange, you'd need a microscope. I'll say it bluntly — I don't see any reason for us to have a stock exchange at all. I think it would be much better for the Estonian economy and its companies if we were, say, a secondary listing tier on the Stockholm exchange," said Helenius.

Many domestic investors are also scaling back their positions on the Tallinn exchange.

"In spring 2020, I was building up positions — investing in Port of Tallinn, Tallinna Kaubamaja, LHV Bank, Coop Bank, Tallink and Eften's real estate funds. But since 2023, I've sold most of those positions, and today I only hold one — in LHV Bank," said investor and TalTech economist Kristjan Liivamägi.

This year, Enefit Green, a major player on the Tallinn exchange, delisted and Ekspress Grupp is planning to follow. The only new listing this year was a single small business IPO on the First North market.

Share prices on the Tallinn exchange's digital board continue to stagnate and the number of tradable companies is steadily shrinking.

Ott Raidla, head of marketing at Nasdaq Tallinn, urged the public to view the exchange more broadly than just a platform for trading shares.

"The exchange is a place where companies can raise capital and capital can be raised using a variety of instruments — not just shares but also bonds. If we look at the Tallinn and Baltic markets more broadly, we've had around 30 bond issues in the past year. It's not unusual for investor interest to shift between shares and bonds from time to time," said Raidla.

Valeria Kiisk, a partner at Redgate Capital, recalled the classic chicken-and-egg dilemma. There are no public offerings because there are no investors; there are no investors because there are no major offerings.

"We don't have large investors, but that's because we don't have large issuers. Offerings like Enefit Green and, earlier, Port of Tallinn attract new investors. Once those investors are in the market, they'll make additional investments," said Kiisk.

Kiisk believes reviving the exchange will require government initiative.

"I think the exchange does have a future if we, as a country, take the right steps," she said. "What have been the biggest developments supporting our exchange over the past decade? The IPOs of Port of Tallinn and Enefit Green and the listing of government bonds on the Tallinn exchange. These are the kinds of state-led efforts that create a solid foundation for attracting both retail and international investors."

"Company valuations are fundamentally attractive, which means that as the economy begins to improve, revenue and profits should show enough positive momentum to attract investor attention. Interest could increase and share prices could begin to rise," said Liivamägi.

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