JUNE 2013 - FEAS

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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013 İSTANBUL MENKUL KIYMETLER BORSASI Furthermore, capacity utilization rates have been elevated and the economy is operating near its potential. The annual inflation rate based on CPI decreased from 10.45% to 6.16% in 2012 while unemployment rate remained unaltered at 9.1%. Weighted average interest rates for TL deposit were 10.05% in the end of 2011 while in end- November 2012 it decreased to 9.46%. The visible improvements in Turkish economy have also boosted foreign trade, while annual exports reached to 140 billion US$ in the period January-November 2012 with a 14.3% increase, imports reached to 217 billion US$ with a decrease of 1.6% in comparison to the same period of 2011. Similarly, tourism revenue which is an important source of foreign currency for Turkey was 17.3 billion US$ in the first three quarters of 2012 compared to 17.8 billion US$ in the same period of 2011. In 2012, İMKB National 100 Index reached to 2,561 (US$ based). The stock market yearly total traded value was 347.85 billion US$ and the average daily traded value of equities amounted to 1.37 billion US$. At the end of 2012, the market capitalization of 406 İMKB traded companies reached to 309 billion US$. Sixteen ETFs (Exchange Traded Fund) are traded on İMKB Collective Products Market. The turnover in fixed income securities transacted on Outright Purchases and Sales Market was 200 billion US$ in 2012. The Repo/ Reverse Repo Market turnover was 2.07 trillion US$ in the same period. The average daily traded value in the overall Debt Securities Market increased by 55% to 15.07 billion US$ in 2012. Twenty six companies offered their stocks for the first time to public in 2012. The amount of funds raised through 26 IPOs was 352.14 million US$. * Information provided by İMKB Annual Average GDP Growth (%), Top 20 Countries (Forecast in OECD countries, 2011-2014) 6,0 5,0 5.30 5.16 4.65 4,0 3,0 2,0 3.66 3.63 3.34 3.03 2.80 2.73 2.62 2.51 2.32 2.22 2.21 1.87 1.68 1.64 1.53 1.48 1.36 1,0 0,0 Chile Turkey Estonia Mexico Source: OECD Economic Outlook No: 92 Israel Korea Australia Slovak Republic Poland Iceland Sweden Norway United States Canada New Zealand Finland Germany Switzerland Austria Ireland Key Information Contacts Capital Markets Board of Turkey www.cmb.gov.tr İMKB Settlement and Custody Bank Inc. (Takasbank) www.takasbank.com.tr Merkezi Kayıt Kuruluşu www.mkk.com.tr The Association of Capital Market Intermediary Institutions of Turkey www.tspakb.org.tr The Turkish Derivatives Exchange (TurkDEX) www.turkdex.org.tr CONTACT INFORMATION Contact Name Mr. Mahmut Aydoğmuş E-mail international@borsaistanbul.com Website www.borsaistanbul.com PAGE 52
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013 KARACHI STOCK EXCHANGE We remain committed to enhancing our risk management and surveillance measures. Nadeem Naqvi Managing Director The year 2010-2011 was full of challenges, economic growth managed to grow by 2.4%. Global economic conditions also affected the domestic economy. The global economy slow down further due to deep-seated euro zone sovereign debt crisis, fragile financial conditions, and intractable fiscal issues running through other developed economies such as USA and England. The downgrade in credit ratings of many advanced economies has complicated the matters to raise debt finance. Despite being a slow year, the headline inflation averaged at 13.7%, agriculture sector managed to overcome the floods and posted real growth of 1.2 percent, services sector on the other hand supported the growth and shown the growth of 4.1 percent. Strong remittances and gradual monetary easing by the State Bank of Pakistan led to encouraging corporate performance. The KSE 100 index declined by 5.61 percent in 2011. It is also encouraging to note that four companies raised equity capital of Rs.16,010.92 million and seven companies listed their TFCs of Rs.16,254.8 million in 2011 this signals a path to recovery in market activity for the next year. To restore volumes and liquidity KSE launched Margin Trading, Margin Financing and Securities Lending and Borrowing products as some of the landmark initiatives. To enhance Risk management measures at KSE the Exchange in conjunction with the National Clearing Company of Pakistan introduced an exposure drop-out facility for members who have met their settlement obligations, this will increase the capacity to trade and/ or reinvest in the market due to prompt margin release. Exchange also developed an online reporting system to facilitate Brokerage Houses in complying with SECP Rule pertaining to intimation to the Exchange regarding any fall in the Net Capital Balance. Moving forward, we remain committed to enhancing our risk management and surveillance measures to further increase transparency and to ensure a level playing field for all investors. HISTORY AND DEVELOPMENT The KSE is the biggest and most liquid exchange amongst the three exchanges of Pakistan. It came into existence on 18 September 1947. It was later converted and registered as a company limited by guarantee on 10 March 1949. Initially, only five companies were listed with a paid-up capital of Rs. 37 million (US$ 0.62 million). The year 2010-2011 was full of challenges, economic growth managed to grow by 2.4%. Global economic conditions also affected the domestic economy. The global economy slow down further due to deep-seated euro zone sovereign debt crisis, fragile financial conditions, and intractable fiscal issues running through other developed economies such as USA and England. The downgrade in credit ratings of many advanced economies has complicated the matters to raise debt finance. The KSE 100 Index registered decline of 5.6 percent and closed at 11347.66 points. As of Dec 31, 2011, ordinary shares of 638 companies were listed having listed capital of Rs. 1,048.44 billion (US$ 11.67 billion) with the market capitalization of Rs.2,945.78 billion (US$ 32.80 billion). In 1991 the secondary market was opened to foreign investors on an equal basis with local participants. This measure, along with a policy of privatization, has resulted in rapid growth of the market since 1991. Management The KSE has an independent Board of Directors (10 directors) with representation from the Members of the Exchange & from the Corporate Community. Five directors are elected from amongst the 200 members of the Exchange and four non member directors are nominated by Regulator i.e., SECP, the Chairman is elected by Board from amongst non member Directors whereas, Managing Director is ex-officio member of the board. KSE is in process of demutualization, it is presently a company limited by guarantee, will be converted into a company limited by shares. Automation of the Exchange KSE has a fully automated trading system with T+2 settlement system whereby all trades settle on the second day after the trade. Internet based trading system was also launched in December, 2004 to provide an additional facility for investors to enter their orders. KSE has also launched a single exchange-traded market for trading corporate bonds in Pakistan using BATS. KSE’s BATS provide live system based, on screen electronic Trading Platform which offer, market participants a transparent and efficient trading system features and facilities crucial for the Debt market Securities Trading. KSE also launched Stock Index Futures Contract and sector indices. This marks a momentous achievement for the KSE Unique Identification Number was introduced to provide a traceable link between every order entered at the trading system of the Exchange. VaR based margining system was also introduced in place of a slab based Risk management system. The new RMS included, amongst others, a new netting regime; a margining system based on Value at Risk (VaR) and Capital Adequacy. KSE has also adopted the FIX protocol (Financial Information Exchange) for both trading and market data. The National Clearing & Settlement Company and Central Depository System has also been introduced. Transparency of the listed companies has been enhanced with the introduction of quality audits, quarterly financial reports and timely dividend payouts. Corporate governance is also now the part of the KSE’s listing regulation. FUTURE OUTLOOK 2012 Introduction of New Products and New Measures: KSE plans to introduce new products into the market, to further cater to the growing needs of its investors and help develop Pakistan’s capital markets. KSE will be introducing: Exchange Traded Funds, new derivative products- options, etc, and Introduction of SME board. Corporatization and Demutualization of stock Exchange: KSE is in process of demutualization, it is presently a company limited by guarantee, will be converted into a company limited by shares. PAGE 53
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