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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2006 SARAJEVO STOCK EXCHANGE Zlatan Dedic General Manager With the introduction of government bonds under the coordination of the Central Bank of Bosnia and Herzegovina, SASE will continue contributing to further development of the capital market. The Sarajevo Stock Exchange (SASE) continuous development of an efficient capital market that offers security to investors was carried into 2005 when SASE completed its third year of operations. During the past year SASE has accomplished exceptional results. There are several factors that contributed to an increase in total turnover of over 176%. Two new brokerage houses were accepted for membership and the total number of SASE members is now 16. On the Official Market, where 11 Privatization Investment Funds (PIFs) are listed, turnover has increased over 100%. In particular, this may have contributed to the initiation of the transformation process in 2005 where all PIFs are becoming Investment Funds. Together with an increase in turnover of PIFs there was an increase of over 23% in Bosnian Investment Funds Index (BIFX), which directly represents the price fluctuation of PIFs. The new listings of the state owned companies currently under privatization process continued in 2005 and contributed in a market capitalization increase of over 72%. This increase in market capitalization was followed with an increase in the Free Market turnover of over 230% where the most traded was the banking sector with over 38% of the Free Market turnover. All of these positive numbers are contributed to high investor’s confidence in SASE. Our internet portal which allows investors access to annual statements and other financial data for all companies listed on SASE together with enabling investors to monitor trading in real time over the Internet are attracting international investors all over the world. With the introduction of government bonds under the coordination of the Central Bank of Bosnia and Herzegovina, SASE will continue contributing to further development of the capital market and of Bosnia and Herzegovina as a whole. HISTORY AND DEVELOPMENT The SASE was founded in September of 2001 by eight brokerage houses and commenced trading on April 12 of 2002. The SASE is a central marketplace for securities trading in the Federation of Bosnia and Herzegovina. The SASE is a joint-stock company which, originally had eight founding members. According to the Securities Law, the SASE members can only be legal entities i.e. brokerage houses with headquarters in the Federation of Bosnia and Herzegovina whose sole activity is trading in securities. The SASE currently has 17 members. All members of SASE must be licensed for trading in securities by the Securities Commission of the Federation of Bosnia and Herzegovina. Trading on the SASE is performed electronically through an order driven electronic trading system BTS (Stock Exchange System). BTS is a computer assisted information and trading system, which enables remote entry, modification, halt and removal of orders, automated matching of orders and concluding trades, supervision of orders and trades, as well as survey of information on trading and on listed securities. In 2003 SASE joined the Stock Exchange Monitor, which is an informational platform of the stock exchanges in South Eastern Europe. At the moment, there are 8 participating exchanges, which operate markets with more than 2,190 securities and more than 170 brokerage houses. At the beginning of 2004, trading at the SASE Official Market started and all 11 Privatization Investment Funds were listed there. The Official Market is a higher level market where only securities that meet special conditions and are approved by the Securities Commission and SASE’s addition board can be listed there. Also in 2004, after two years of trading with only call auction trading system, continuous trading has been introduced at the SASE under the name Multi Fixing Trading Schedule (MFTS). Only the most liquid securities on the SASE have been transferred to MFTS. In conclusion, after only three years of operations market capitalization of SASE has reached over US$ 3.8 billion. FUTURE OUTLOOK The SASE expects that the excellent results of 2005 will continue into the next year together with accomplishment of greater efficiency and transparency of the Capital Market in the Federation of Bosnia and Herzegovina. SASE future outlook for 2006 includes following activities: • issuance of the government bonds by the Central Bank of Bosnia and Herzegovina which would activate SASE trading platform for bonds. • continuing to list strategic companies currently under privatization process on SASE Free Market. • undertaking steps toward unification of the Capital Markets in Bosnia and Herzegovina and increase SASE participation in integrative processes of central and southeast Europe. • introduction and promotion of the Free Market index under the name SASX-10 which would be formed from a top 10 companies on the SASE Free Market. • introduction of first Investment Funds in the Federation of Bosnia and Herzegovina. • enactment of the new securities legislation in the Federation of Bosnia and Herzegovina which would together with the new Securities Law in the Republic of Srpska contribute to unification of the Capital Markets in Bosnia and Herzegovina. • improvement of the SASE internet portal which allows investors easier access to annual statements and other financial data for all companies listed on SASE. • presentation of privileges of the Official Market to the most liquid companies of the Free Market. • organization of education seminars for SASE members; and • increase in transparency of Capital Market and improvements in corporate governance code in compliance with OECD recommendations. 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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2006 SARAJEVO STOCK EXCHANGE OFFICIAL 6 MONTH STATISTICS US$ millions # Shares millions Total Volume Average Daily Volume Total Volume Average Daily Volume Stocks Jan-06 22.2 1.2 2.7 0.15 Feb-06 20.4 1.3 2.9 0.18 Mar-06 23.5 1.4 3.6 0.21 Apr-06 13.2 0.88 1.9 0.13 May-06 18.2 1.1 4.3 0.25 Jun-06 15.2 0.90 3.6 0.21 TOTAL 112.6 1.1 18.9 0.19 Bonds Jan-06 n/a n/a n/a n/a Feb-06 n/a n/a n/a n/a Mar-06 n/a n/a n/a n/a Apr-06 n/a n/a n/a n/a May-06 n/a n/a n/a n/a Jun-06 n/a n/a n/a n/a TOTAL n/a n/a n/a n/a Other Jan-06 n/a n/a n/a n/a Feb-06 n/a n/a n/a n/a Mar-06 n/a n/a n/a n/a Apr-06 n/a n/a n/a n/a May-06 n/a n/a n/a n/a Jun-06 n/a n/a n/a n/a TOTAL n/a n/a n/a n/a Market Capitalization (US$ millions) Index MONTHLY STOCK VOLUME VS INDEX (US$ millions) Stocks Index MONTHLY MARKET CAPITALIZATION (US$ millions) Jan-06 4,078.0 4,165.6 Feb-06 3,936.6 4,127.8 Mar-06 4,106.5 4,014.4 Apr-06 4,140.6 3,901.5 May-06 4,102.0 3,636.8 Jun-06 4,182.8 3,470.1 CONTACT INFORMATION 25 20 15 10 5 0 4,500 4,500 4,000 4,000 3,500 3,500 3,000 3,000 2,500 2,500 2,000 2,000 1,500 1,500 1,000 1,000 500 500 0 0 Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun Contact Name Mr. Goran Kahvedzic E-mail goran.kahvedzic@sase.ba Website www.sase.ba * Please refer to page 54 for the Bosnia and Herzegovina country report. PAGE 123
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