JUNE 2013 - FEAS

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013
ZAGREB STOCK EXCHANGE
The primary task of Zagreb Stock
Exchange is to become the market of
choice in the region.
Ivana Gazic
President of the Management Board
Zagreb Stock Exchange faces new challenges
in the still uncertain economic environment.
Encouraged by signs of a fragile recovery
and with strong fundamentals it will continue
to act as an efficient and rule-based market
harmonized with the European standards and
remain confident in the progress of the Croatian
capital market. This confidence is even stronger
since after long negotiation process that
commenced in 2005, Croatia is now scheduled
to become the 28th European Union Member
State in July 2013.
The primary tasks of Zagreb Stock Exchange
will be to lead the development of the
capital market in the region while providing
transparent, secure, cost-effective and efficient
marketplace as well as to obtain the highest
quality of capital market services in order to
meet the needs of investors, issuers and all
stakeholders.
Zagreb Stock Exchange will carefully observe
global as well as regional economy and equity
market trends and remain in line with market
expectations in order to become the market of
choice in the region.
HISTORY AND DEVELOPMENT
The stock exchange trading in Croatia was
active since 1907 till 1911 and again since 1919
till 1945.
After the World War II the Zagreb Stock
Exchange was revived in 1991 as a jointstock
company with 25 commercial banks
and insurance companies. From the initial 25
members (brokerage companies), thanks to the
trade growth and development the number of
members has climbed to some forty-odd active
traders today: banks and private brokerage
companies, and 43 shareholders. At the very
beginning, trading took place at big auctions
held at the Exchange head office with all brokers
actually physically present and in 1994, an
electronic trading system was introduced.
In 2007, the Croatian financial market
consolidated as the Varazdin Stock Exchange
merged with the Zagreb Stock Exchange.
These new circumstances, resulting in a larger
number of listed securities and greater trading
volume, along with a natural development of the
financial market that saw the investment climate
improve and gave rise to a stronger interest of
all market participants in new financial products,
highlighted the need for the implementation of
a new system that would be able to meet the
needs of the small, but extremely fast-growing
Croatian market.
The new trading platform, launched in autumn
2007 after several months of preparations,
represents an unprecedented technological
enhancement.
ZAGREB STOCK EXCHANGE IN
2012
If 2012 in the local capital market were to be
interpreted on the basis of statistical trading
data alone, it might prove difficult to find a
bright side to the report: regular share turnover
was practically halved while more than a -35%
decline in the total turnover was attenuated to
some extent only by growth in the regular bond
turnover in excess of +107%. Stock indices
CROBEX and CROBEX10 ended at virtually the
same level as the year before, which is good
news actually, especially taking into account a
two-digit correction in the course of 2012.
Fortunately, statistical data are not the only
measure of market dynamics - figures aside,
there were a number of developments which
might lead to positive results in some future
reports.
Year 2012 on the Zagreb Stock Exchange was
marked by several important anniversaries:
20 years since the first ever transaction -
concluded on 30 March 1992, and the CROBEX
index celebrated 15 years since its launch,
which was highly significant for raising the
visibility of the local capital market, particularly in
the years crucial for strengthening shareholder
culture and spurring the interest of foreign
investors on the Zagreb Stock Exchange and in
the Croatian capital market in general.
For three years now, the educational needs
of the financial market have been served by
the ZSE Academy, which provided seminars,
lectures and training programmes to more than
1,000 participants in 2012 alone while educating
more than 2,000 participants since it was
established.
However, 2012 will be remembered most for the
launch of structured securities: for the first time
since the Exchange was founded, this enabled
trading in a new type of instrument - the first
securities to be admitted to the International
MTF, while also introducing the first foreign
issuer to the Zagreb Stock Exchange. In
addition to expanding the range of investment
products in the local market, it also paved
the way for investing in an asset class which
might otherwise be very difficult or impossible
to access. As it is, a total of 16 certificates,
with gold, crude oil, German Bunds and the
DAX index as the underlying instruments,
were available for trading on the Zagreb Stock
Exchange by the end of the year. Investor
interest was strong so between mid-September
- when certificates trading began - and the end
of the year, turnover in structured securities
reached almost EUR 7 million.
FUTURE OUTLOOK
Croatia should be a member of the EU from 1
July 2013 as the 28th country to join the Union.
Full European Union membership is expected
to accelerate fiscal and structural reforms and
should make Croatia more attractive for foreign
investors.
However, structural reforms lag and the concern
still remains while Croatia is yet to see the signs
of a sustained economic recovery. Further
government actions will be essential to induce
the recovery of the domestic capital market,
especially regarding further privatization of
public enterprises.
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