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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT APRIL 2007
MACEDONIAN STOCK EXCHANGE
Ivan Steriev
CEO
2005 was without any doubts the best year
since the commencement of trading at the
Macedonian Stock Exchange in 1996, both
in terms of turnover and securities prices
appreciation.
The year 2006 was the most successful year
in the history of the Macedonian Stock
Exchange (MSE). Total turnover reached
EUR 500 million which is more than 248%
increase compared with 2005. More detailed
analysis of the turnover shows the quality level
of the MSE performance in 2006: trading in
equities through BEST reached approximately
EUR 140 million (85% increase compared with
the same figure in 2005), bond trading was
EUR 36.3 million (7.4% higher than in 2005),
block trading also increased by 700%, mainly
because of the sale of the state electrical
company.
The MBI-10 index was up 61.5% p.a.
Also, the MSE ended up 2005 with 43 listed
companies that have market capitalization of
around EUR 830 million, increasing the total
market capitalization of listed companies by
71.5% compared with the end of 2005 (when
57 were companies listed at the MSE).
The reasons for the market growth may be
found in several facts: improved disclosure of
the listed companies, especially the financial
reporting; the introduction of new internetbased
system for the distribution of
information from listed companies; higher
presence of foreign portfolio investors, mainly
from the region (30%-40% on the buying side,
monthly average); higher participation of the
domestic investors on the market;
investments of the two new private pension
funds; increased public interest, etc.
In 2006, the MSE has strengthented its
importance and its influence in the
Macedonian financial system and has proved
itself as an alternative way for investing the
capital.
HISTORY AND DEVELOPMENT
The MSE was founded on 13 September 1995
and commenced trading on 28 March 1996,
as a central marketplace for trading in
securities and the first organized stock
exchange in the history of the Republic of
Macedonia.
The MSE was founded as a not-for-profit joint
stock company with founding capital of EUR
500,000. According to the legislation that was
in force in 1996 the only eligible founders of
the MSE were banks and other financial
institutions (saving houses and insurance
companies). The MSE initially had 19
members: 13 banks, 3 saving houses and 3
insurance companies.
All MSE members must be licensed for
trading in securities by the Macedonian SEC.
Only brokers, authorized by the MSE
members may trade in securities at the MSE.
The MSE currently has 17 members–11
brokerage houses and 6 banks. Starting from
20 June 2001 (with the new amendments of
the Securities Law), MSE started to operate
on a for-profit basis, with a founding capital of
EUR 500,000. The MSE shareholders may be
any legal and private domestic and foreign
entity. Shareholdings per entity is limited up to
10% of the MSE outstanding shares.
Currently the MSE has 21 shareholders
(9 brokerage houses, 9 banks, 1 insurance
company and 2 private investors).
FUTURE OUTLOOK
The new listing rules introduced a new tier in
the official market, called Super Listing,
designed for the top-listed companies. It is
expected to improve the disclosure of these
companies, especially because of the
obligation for bilingual disclosure of all
information (in Macedonian and in English)
and the detailed disclosure of the
shareholder’s assembly decisions.
Expectations are that most of the listed
companies will remain on the official market
and that the top companies will decide to be
listed on Super Listing. The future prospects
are that the securities that remain listed will be
liquid and that listed companies will continue
to improve their disclosure practice.
Starting from 2007 the MSE Code of
Corporate Governance will become effective
and in the beginning of 2008 the companies
on Super Listing will be obliged to announce
a notice for compliance with the code.
The Macedonian government has decided to
give away 2% of the state shares in Telecom
to the employees which, with the possible
sale of the state capital in 2007, will affect the
trading potential of the Telecom shares and
result in higher free-float. There are also
expectations for privatization of the energy
sector and infrastructure.
Some limited liability companies with
dominant owners have expressed their
interest for an exit strategy by using IPO’s or
some of other possibilities for the sale of big
portions of shares from the trading rules. Also,
there are expectations for issuing of corporate
and municipalities bonds.
The presence of foreign investors mainly from
the region creates greater potential for the
entrance of investors from other European
countries. Also, we expect the presence of
foreign investment funds, as well as the
foundation of domestic ones. There are
several expressions of interests for the
foundation of investment funds, as well as for
new members of the MSE.
The Macedonian government will continue the
issuance of bonds in 2007 which should
contribute to a further increase in the trading
activity in debt instruments.
The expectation is that the two newly founded
private pension funds will continue their
presence on the market.
The MSE will actively follow all events in the
region regarding the regional co operations
between stock exchanges.
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