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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT APRIL 2011
SARAJEVO STOCK EXCHANGE
In the last year, much attention was given to
increase the level of corporate governance
of companies listed on SASE.
Zlatan Dedic
General Manager
The year 2010 for the Sarajevo Stock Exchange
was characterized by the effects of the global
financial and economic crises, which were
heavely felt in the financial and real sector of BiH.
An unfavorable political ambiente, low levels of
Foreign Direct Investments coupled with an nonstimulative
surrounding for doing business as well
as an inadequate commitment to economic
reforms could not have positive impacts on the
development of the capital market. The
privatization of State Owned Enterprises (SEO),
including privatizations through the Exchange,
was on a minimum level, while private companies
and local communities did not have the courage
to finance their growth through the capital market.
All of this lead to an abstention of investors from
the capital market, not only in BiH, but also in the
region. An overall lethargy and minimum daily
turnovers, which couldn't be alleviated by the
newly issued bonds of the Federation of Bosnia
Hercegovina, are the main characteristics of the
previous period.
This unfavourable trends in the Exchange-trading
motivated the staff of the Exchange to higher
engagement. Activities were taken aimed at
increasing the sell-side, ie the offering of new
instruments. In line with that, the project "Going
public and public offerings" was launched, which
targeted the best-known limited liability
companies in the Federation of BiH. As a great
number of these companies have reached a limit
in their development in their current way of
organization, they were seen as the prime
candidates for going public. Furthermore, the
announcements of major investments in the
electro-energetic and infrastructure sector in the
Federation of BiH led us to regular contacts with
the managment of the SEO's from these
branches, in an effort to show the possibility to
finance some of the projects through the local
capital market, ie. through the issuance of
corporate bonds.
Another project of SASE, called "Municipal bonds"
was continued in 2010. Although in 2010 no
municipality has actually issued bonds in order to
finance their development, we are confident that
the public discussion about this issue, which was
launched by SASE, is getting more and more
public awareness, and will eventually lead to the
first issue of these securities.
In the last year, much attention was given to
increase the level of corporate governance of
companies listed on SASE by means of the
"Corporate Governance Scorecard", which was a
joint project of SASE and the International
Finance Corporation (IFC). Another focus was on
the surveillance part and the preparation of
measures in order to prevent manipulative
behaviour on the market, as well as the increase
of visibility and presence of our market on the
international investment radar-screens. SASE
presented itself on the 25th Aniversary of the
Istanbul Stock Exchange; we presented one
issuer from our market, JP "Elektroprivreda BiH"
d.d. Sarajevo on an international Roadswow held
in Vienna. At the same time, SASE and the Wiener
Boerse are offering real trading data to the major
data-vendors in the world.
On the 5th Annual International Conference of the
Sarajevo Stock Exchange, titled "Major projects
and the capital market", we presented the major
projects of the coming investment cycle in FBiH,
as well as the possibilities to finance some of the
major projects through the issuance of securities.
Behind us is the year with the minimum turnover
in SASE's history. Nevertheless the fact that in
front of us is another difficult year, we hope da the
crisis has reached its bottom, and that the year
2011. will bring positive trends to the major
determinants of the Exchange business.
HISTORY AND DEVELOPMENT
The Sarajevo Stock Exchange (SASE) was
founded in September of 2001 by eight brokerage
houses and commenced trading on April 12 of
2002. SASE is a joint-stock company and a central
marketplace for securities trading in the
Federation of Bosnia and Herzegovina. Currently it
has 13 trading-members, whose headquarters are
spread around the Federation of Bosnia and
Herzegovina, the majority being in the capital,
Sarajevo.
SASE calculates and publishes 3 indices. SASX-10
is the main index on the Sarajevo Stock
Exchange.
In 2009, the Free Market, where most of the
issuers are listed, was divided into 3 subsegments,
with different trading algorithms and
different price limits The Prime Free Market is
reserved for the 30 most liquid and transparent
issuers, and is a step behind the Official market.
FUTURE OUTLOOK
After a rather sluggish year in 2010, there is
reason for a more optimistic outlook for 2011.
Reasons for optimistic expectations
in 2011 include the announced privatization of
State Owned Enterprises (minority and majority
stakes) through the Stock Exchange, which would
give the market much needed new trading
material. Another promising aspect would be the
financing of infrastructure and energy projects
through public offerings of bonds on the
Exchange, as well as the issuance of additional
series of state bonds for "frozen foreign savings
accounts". The issuance of the first municipal
bonds is also only a step away, after the legal
boundaries for this step have been removed.
• Introduction of volatility interruptions: As a result
of decreased liquidity on the market, there is a
trend that small trades bring volatility to the share
prices. A volatility interruption will be triggered in
the event of a potential price being outside either
of the two pre-defined price ranges around the
reference price. The volatility interruption will
contribute significantly to the prevention of price
jumps and will help to increase price continuity.
• Delisting of non-traded shares from the market:
As a result of the mass-voucher privatization in
BiH, many joint-stock companies are listed on the
Sarajevo Stock Exchange. Many of them are
traded very seldom or even never. The goal is to
get companies from the market which are not
interested in outside investors, and not interesting
to the investment community.
• Educational / promotional campaign aimed at
the following stakeholders on the capital •Going
public: The financial system in BiH is rather
banko-centric, as most of the finance needs
of the companies are taken to the commercial
banks. Our goal is to show to thecompanies that
the capital market is an alternative/supplement for
their financing needs.
•Education of the members of Parliament, the
government and the administration: The capital
market is still not "discovered" by the main actors
of the political life in BiH. Our goal is to
educate them, form lines of communication and
make them more sensitive to the needs of the
capital market as well as the function of a capital
market in an market-economy.
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