"Euro changeover is a test of the economy's maturity": interview with Freedom24 head in Bulgaria

Bulgaria's transition to the euro has become one of the main drivers of the local stock market in early 2026, Bloomberg wrote. Since the beginning of the year, Bulgaria's main index SOFIX has risen by almost 7% - investors are betting that the country's entry into the eurozone currency bloc will accelerate the integration of the economy with Europe and attract new capital. Alexander Buyukli, Director of Freedom24 in Bulgaria, told Oninvest why the transition to the euro is not only a new opportunity for investors, but also a test of the maturity of the Bulgarian economy.

Bulgaria's transition to the euro is a fundamental shift in the country's economic logic. For a long time it relied on a catching-up development model; now, having become part of the eurozone, Bulgaria enters a different institutional environment: there is no more currency risk, capital becomes cheaper, and banks' access to the European Central Bank's liquidity increases. At the same time, the country's debt is beginning to be perceived by the market as an element of the overall eurozone architecture, rather than a peripheral risk.

In the medium term, Bulgaria is gradually moving towards a model where investment, lending and participation in more complex EU production chains become the main ones. On the one hand, investor confidence and access to finance are increasing. On the other hand, the role of structural reforms is sharply increasing, because without efficiency gains and institutional strengthening, the country risks being stuck in the position of a cheap periphery within the EU. If the judicial system, transparency of governance and quality of regulation are strengthened, the single currency will become a catalyst for long-term growth - from quantitative pursuit to qualitative development.

In the case of Bulgaria, the effect of the euro changeover is indeed structural. The country has long lived without its own active monetary policy: the currency board has rigidly pegged the lev to the euro. Joining the eurozone does not provide a quick stimulus boost in the spirit of Keynesian policy: it is not so much GDP growth in the coming quarters that changes, but rather the confidence framework within which businesses and investors make long-term decisions. Bulgaria's GDP growth of 2.6% in 2026 is forecast to be above average for many eurozone core countries. For peripheral economies, currency and institutional risk is a hidden tax on capital. A common currency not only lowers the borrowing rate, but also increases the willingness of long-term capital to enter the country, changing the financing model.

For the stock market, this is of particular importance. On a short horizon, the euro transition alone rarely produces a sustained rally. But in the long term, a lower country risk premium broadens the investor base and increases the chances that company multiples will rise to the level of comparable eurozone countries.

The key question now is: will integration into the Eurozone turn into a structural development of Bulgaria's economy, or will the country remain on the periphery, but already inside the European Union?

Bulgaria has long been part of Europe, but with unnecessary risk. The euro is changing everything: investors see the country as part of the big European pie, the risk premium is falling, share prices are rising even without super profits for companies. At the same time, the Bulgarian stock exchange is tiny - its total capitalization is about 8 billion euros - any inflow can give 20-30% annual return due to the effect of a low base. In the US, it would not have been noticed. This is not an economic miracle, but a change of status from "risky periphery" to "stable Europe".

Since the beginning of 2026, the turnover of the exchange has increased dramatically: the total turnover of trading on the Bulgarian Stock Exchange in January 2026 amounted to more than €45 million - 2.6 times more than in the same period in 2025. The number of transactions increased 2.8 times year-on-year and exceeded 16 thousand transactions. Growth was primarily driven by companies in the banking, technology and holding sectors, the segments most sensitive to currency risk and country premium.

The number of new foreign investors on the exchange increased by 64% in January 2026 compared to January 2025. The switch to the euro has removed the currency risk, making Bulgarian equities almost European in terms of reliability and risk profile. The increase in activity is not only noticeable on the stock market. According to the Bulgarian National Bank, foreign direct investment (FDI) in Bulgaria in 2025 increased by 14.2% to €3.26 billion, which corresponds to about 2.8% of the country's GDP.

A particularly noticeable acceleration of capital inflows occurred at the end of the year amid preparations for the country's accession to the eurozone: in December alone, net FDI inflows amounted to €383.2 million - 117% more than a year earlier. The main sources of investment were the Netherlands (€635.9 million), Greece (€476.9 million) and Italy (€315.5 million). A similar picture was observed in 2007 after Bulgaria's accession to the EU: SOFIX then increased by 44.42% to 1934 points in almost a year (historical maximum in October 2007). FDI rose from about €3.15 billion in 2005 to €8.5 billion in 2007. It was a classic surge of confidence, but it quickly ran up against the constraints of low productivity and a narrow economy.

Today, the quality of growth drivers is much higher: the transition to the euro is not just a change of status, but institutional economic integration with full access to ECB instruments. Against this background, we can expect a continuation of positive dynamics - albeit smoother than the one-off bursts of the past.

We believe that the trend will continue: the price-to-earnings (P/E) ratio will rise to 10-12 from the current 7, liquidity will improve, turnover will become stable, ETFs and cross-listings (listing of Bulgarian companies on different European exchanges - Oninvest) will appear, which will make the market more attractive for long-term players, against this background it is not excluded that SOFIX will show new highs.

However, a small market is more vulnerable: in the event of a global rate hike or panic in emerging markets, outflows could be rapid. Therefore, it is important to keep in mind the current geopolitical context and the situation in the Middle East, which may affect global risk appetite.

Financial companies have been the first leaders: banks now operate entirely in euros, which eliminates currency risk in settlements. IT companies that sell services to European customers will find it even easier to attract investment from the EU with the euro changeover. Growth in this sector is already noticeable - in January 2026, it was banks, technology and holding companies that provided the main increase in exchange turnover, as they are the most sensitive to the reduction of the country risk premium.

Bulgaria will be able to receive about €5-7 billion from European Union funds in 2026-2027 for infrastructure and economic development, which will also accelerate projects in energy and transportation. Among the potential beneficiaries is the energy company ČEZ Group.

Pharmaceutical companies also look attractive, as exporting medicines to the EU has become easier. Shares of pharmaceutical company Sopharma have risen by more than 20% since the beginning of the year and by 75% over the last 12 months.

The main beneficiaries are companies that operate with EU countries or depend on foreign customers. Strong export companies with strong technology and financials appear to be the most sustainable in terms of growth. Among the most liquid issuers in January 2026 are pharma company Sopharma, software developer Sirma Group Holding and pharma distributor Sopharma Trading.

Bulgarian tech company Shelly Group makes smart home devices controlled via smartphone. It gets about 93% of its revenue from European customers: the DACH region (Germany, Austria, Switzerland) forms 49% of sales. Shelly is one of two Bulgarian "unicorns" with a valuation of over €1 billion. Since 2021, the company has been traded simultaneously on the Prime Standard of the Frankfurt Stock Exchange and in the Eurobridge segment of the Bulgarian Exchange.

Sirma Group develops software for banks, offices and governments in Europe, and its stock price has risen nearly 20% in the past three months.

Weiser Technology sells computers, software and IT services to European companies. At the end of 2025, the company's revenue nearly doubled year-on-year, while its loss also increased to €1.4 million, up from €1.3 million a year earlier. The company expects to return to profitability in 2026.

Sopharma: - one of the largest Bulgarian pharmaceutical companies with revenues of over €1 billion, with 23% of sales coming from Germany, Italy and other EU countries. The company's earnings and revenue showed strong growth in the last reported quarter, with the stock adding almost 25% since the beginning of the year.

Other potential beneficiaries include Trace Group, the leader of the Bulgarian construction and infrastructure sector, and Eurohold Bulgaria, an investment holding company.

Political risks that arise when there is a change of government, which is not uncommon in Bulgaria. As a result, already started reforms in taxes, banking regulation and business support may start but change or stop. Scandals involving corruption or non-transparent tenders for government contracts also scare away foreign investors. Bulgaria remains one of the most vulnerable countries in the EU according to Transparency International 's Corruption Perceptions Index.

Economic risks - in particular, Bulgaria's dependence on exports to the EU, which accounts for about 64-65% of all Bulgarian exports. If the economy slows down there or energy prices rise, which is especially relevant in the current geopolitical environment, Bulgarian companies will be affected. After the euro changeover, inflation may rise slightly in the short term due to price adaptation - the European Commission forecasts it at 2.9% in 2026. There is also a risk of overheating: if money starts flowing in quickly, a bubble could inflate - for example, in the real estate market or in bank lending, as it already happened before the 2007-2008 crisis. Bulgaria is a small and open economy, so any global shocks, such as a recession in Germany, are felt quite strongly.

Finally, there are institutional risks - they concern the rules of the game in the local market and the internal structure of companies. Corporate transparency is not yet at the right level, which worries major international investors.

Bulgaria is a market that is on the cusp of major capital inflows and greater transparency due to the changeover to the euro. At the same time, shares of many companies remain inexpensive, especially those that sell their products to the European market. Many companies have multiples of around 10-15 times annualized earnings, while large European and global funds have not yet entered the market en masse. Interest is already visible: in January 2026, the number of new investors on the Bulgarian Stock Exchange increased by 30% and the number of new foreign investors by 64%.

At the same time, the country's macroeconomic fundamentals remain stable. According to Eurostat and the European Commission, Bulgaria's public debt is about 24% of GDP, one of the lowest in the European Union, while the eurozone average is over 88%. The low debt burden and relatively stable fiscal position create a favorable base for investment inflows after the country joins the eurozone. In essence, this is an opportunity to enter the market at an early stage. If international investor interest continues to grow, valuations could rise significantly - up to doubling in the next two years. Bulgaria in this sense is not exotic, but a part of Europe with growth potential.

This article was AI-translated and verified by a human editor