JUNE 2013 - FEAS
JUNE 2013 - FEAS
JUNE 2013 - FEAS
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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT <strong>JUNE</strong> <strong>2013</strong><br />
MONTENEGRO STOCK EXCHANGE<br />
CAPITAL MARKET DEVELOPMENT<br />
AND ECONOMIC OUTLOOK<br />
After record revenues, number of concluded<br />
transactions and the amount of market<br />
capitalization, the Montenegrin capital market,<br />
in the period after the investment boom from<br />
2007, shows negative trends in terms of the<br />
market liquidity. That the market is subject to<br />
a period of stagnation and high reluctance of<br />
investors can also be concluded by observing<br />
the movement of the index in the last three<br />
years. The main factor that led to significantly<br />
worse results is the poor macroeconomic<br />
situation, both in Montenegro and beyond,<br />
leaving effects, primarily in terms of less money<br />
available for investment in the retail sector<br />
and among institutional investors. In addition,<br />
the Montenegrin capital market should still be<br />
seen as an “emerging market”, usually seen<br />
as risky, which leads to avoidance in the times<br />
of recession, due to the reluctance of investors<br />
seeking safe yields.<br />
According to credit agencies’ estimates,<br />
Montenegro currently has the following credit<br />
ratings:<br />
• Ba3 (with stable outlook) - by credit agency<br />
Moody’s (confirmed in May 2012).<br />
• BB- (with stable outlook) - by credit agency<br />
Standard and Poor’s confirmed in June<br />
2012).<br />
Bad macroeconomic situation in Montenegro<br />
is caused largely by external economic<br />
factors and the influence of global economic<br />
crisis. The main characteristics of the current<br />
macroeconomic situation in Montenegro are:<br />
slowing economic growth (expressed by a<br />
significant drop in GDP) and increase in the<br />
level of tax and other debts in the economy,<br />
resulting in a significant increase in the level of<br />
government debt in relation to the GDP level.<br />
The current macroeconomic situation is also<br />
characterized by stagnation in credit activities of<br />
the banking sector which is directly caused by<br />
large amounts of bad loans (approved primarily<br />
in the period of investment boom).<br />
Incentives for improving the macroeconomic<br />
environment and the overall situation can be<br />
expected with the completion of announced<br />
major infrastructure projects in the sector<br />
of providing services. The start of official<br />
negotiations on accession to the European<br />
Union presents a significant step in terms of<br />
achieving macroeconomic stability (through<br />
the provision of better sources of financing<br />
and the government’s debt consolidation) and<br />
through the harmonization and implementation<br />
of European legislation, which is a significant<br />
argument in the process of attracting foreign<br />
investors and fostering further growth through<br />
the realization of foreign direct investments.<br />
The real growth rate of GDP in the first quarter<br />
of 2012 compared with the same period in 2011<br />
was negative, i.e. it amounted -2.4%, while the<br />
second quarter indicates the real growth rate<br />
0.3%. (Source: Central Bank of Montenegro,<br />
Ministry of Finance of Montenegro, Statistical<br />
Office of Montenegro - Monstat)<br />
According to the report “Economic Freedom<br />
of the World” published by the Heritage<br />
Foundation and the Wall Street Journal,<br />
Montenegro’s economic freedom score is 62.6,<br />
making its economy the 70th freest in the <strong>2013</strong><br />
index. Its score is essentially the same as last<br />
year, with notable gains in the control of public<br />
spending, business freedom, and freedom<br />
from corruption balanced by declines in labor<br />
freedom, monetary freedom, and trade freedom.<br />
Montenegro ranks 33rd out of 43 countries in<br />
the Europe region, and its overall score is above<br />
the world average.<br />
Key Information Contacts<br />
Securities Commission of Montenegro www.scmn.me<br />
Central Depository Agency www.cda.me<br />
Central Bank of Montenegro www.cb-mn.org<br />
Ministry of Finance www.mf.gov.me<br />
Montenegro Statistical Office www.monstat.org<br />
CONTACT INFORMATION<br />
Contact Name Ms. Suzana Drincic E-mail info@mnse.me Website www.mnse.me<br />
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