Why Investors Are Drawn to the Czech Republic

Published: 05.07.2021 Related countries:  Czech Republic Czech Republic

The Czech Republic has one of the oldest Stock Exchanges and continues to grow as a country that attracts lots of Foreign Direct Investment.

Investing in the Czech Republic

The Prague Stock Exchange goes all the way back to 1871 when Prague and the Czech Republic still fell under the rule of the Austro-Hugarian Empire. In its early days, the Prague exchange was all about commodities – mainly sugar and sugar-related products. As the years went by, the exchange moved with the times to deal mainly in stocks of public companies and by time of World War I, was known to only trade in stocks.

Fast-forward to the end of the 1980s and the fall of the Berlin Wall, and the onset of capitalism was there for all to see. In 1993 the Prague Stock Exchange was ready to do business again after over 1000 state-owned companies and enterprises had gone private after the collapse of the Czech communist government.

At present, the Prague Stock Exchange is host to hundreds of local and important companies – all of which are measured by the PX index. Renowned companies on the Prague Stock Exchange include Unipetrol and Skoda Automotive – highlighting Czechia’s powerful automotive industry.

Why is Czechia appealing to investors?

In terms of FDI (Foreign Direct Investment), the Czech Republic is the biggest recipient of such funds just after Poland with EU member states being the main contributors. First on the list is the Netherlands, followed by Luxembourg, then Germany, and lastly, Austria. Recent European market analysis has also indicated that large amounts of FDI stocks have come into the country by way of US, Korean and Chinese investors.

Manufacturing is Czechia’s biggest drawcard, with the majority of FDI stocks going towards that sector – defined by the country’s metallurgy and car industry. Subsequent significant recipients of foreign direct investments are the real estate and retail sectors. Part of Czechia’s appeal as a country for foreign investors has to do with its geographical location – at the heart of Central Europe, its skilled and easily affordable labour force, and its slew of investment incentives.

Why the Czech Republic is ripe for investment

Prague has proven to be quite the techno power-house of start-ups with the city already being home to numerous brands and one of the biggest anti-virus software maker – AVAST. Prague continues to showcase a lifestyle and an economy that thrives. Czechia’s banking industry is also on the level – its central bank displays its strength and independence by regulating a stable currency -which in turn encourages external investing interests.

One of the lowest unemployment rates throughout Europe breeds a rigorous business environment while a track record of industrial production with further growth potential and a skilled labour force all combine to make Czechia ripe for investment.

The country’s prowess for driving investment and innovation only serves to strengthen the Prague Stock Exchange – where investors and online brokers alike can invest in over a thousand private companies or speculate on currency pairs, derivatives or commodities. The US dollar’s dominance over the Czech Koruna has no doubt played into the narrative of why the US has major investment interests in the Czech Republic. At the time of publication, 1 US Dollar was equivalent to 21.23 Czech Koruna.

When viewed from this angle, it becomes quite obvious as to why Czechia has remained part of the EU, but not of the eurozone. By not adopting the Euro as its official currency, Czechia is able to offer an appealing conversion rate to multiple international investors, which only serves to strengthen its position as a formidable player on the international scene.


Delivered by CzechTrade team Calgary

Source: Prague Forum