As global stock markets continue to suffer major losses, the Prague Stock Exchange (PSE) is trying to attract more small investors by introducing several new investment products.

Most of the alternative products, including financial derivatives such as futures, investment certificates and warrants, have already proven popular with investors, who can currently buy them from banks and other financial service providers.

Though not currently available on the PSE, derivatives account for as much as 50 percent of investment transactions conducted by small investors and could hit the market as early as the end of the summer.

"It looks like there is a good opportunity to expand the market's portfolio now," said Petr Koblic, general director of the PSE. "We'll work toward enabling brokers to start trading with alternative products on the stock market."

Nine in one

Brokerage company Cyrrus was one of the first to respond to the PSE's call for new investment products. In late May it came up with the PX Cyrrus, a product that allows investors to buy all of the nine blue-chip stocks on the PSE's PX index.

The index currently comprises Central European Media Enterprises, ČEZ, Český Telecom, Erste Bank, Komerční banka, Orco, Philip Morris, Unipetrol and Zentiva.

The PX Cyrrus, which will be sold in certificates, should be popular with small investors because it is less risky than trading individual stocks. That's because its price won't hinge on one stock but on the performance of the entire index, which reduces volatility.

"The PX Cyrrus certificate will enable people to invest in all the blue-chip stocks on the market at once, so its performance will be based on nine stocks rather than just one," said Martin Kozumplík, Cyrrus' chairman of the board.

And at 5 euros ($6.40/140 Kč) a certificate, it's 25 percent less expensive than the cheapest stock on the PX.

"By buying the PX Cyrrus certificate, the investor takes lower risk, pays less and can monitor its value at any time," Kozumplík said.

It has been traded on the EUWAX market in Stuttgart, Germany, since late May, but won't be introduced on the PSE until later this year.

PSE spokesman Jiří Kovařík said the PSE first needs to receive authorization from the Securities Commission to launch derivatives. If it gets the green light, derivatives could hit the PSE as early as September.

Futures on the way

The PSE is also planning to introduce futures, another derivative that allows traders to speculate and make money on both positive and negative developments in an individual company or currency — or even the entire market.

A pilot program for futures trading is already under way, and the real thing could start in September.

Launching futures was one of the first steps in the PSE's development strategy to introduce more financial derivatives, including options and warrants, to the market.

Because futures give traders more room to speculate than regular stocks, they're good for small investors who have less money and therefore less opportunity to make money.

Financial analysts say expanding the PSE's portfolio in favor of smaller traders could help rejuvenate the market, which has been in a slump for the past few months.

While a significant number of larger players have left the PSE recently as it's continued to fall thanks to an overall downturn on global markets — a result of fears of rising interest rates and inflation — small investors are getting more active.

"Most of the recent demand for Czech stocks was generated just by small investors," said Dušan Jalový, an analysts at HVB Bank.

Analysts nevertheless insist that the PSE will rebound, and that the blue chips remain a good investment.