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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2010BANJA LUKA STOCK EXCHANGEMilan BozicCEOWe have understood the crisis as anopportunity to look at the real possibilitiesfor the development of the capital market inthe Republic of Srpska.Introduction by DirectorDuring 2009, the trading on the Banja Luka StockExchange (BLSE) was conducted within thelimitations imposed by the global economic crisis.Low liquidity of the stock market is a result ofuncertainty regarding its long-term impact oncompanies’ business results. Therefore, theattention of investors has been largely focused onbonds. The total turnover of BAM 180 million waslower by 52% compared to the previous year. Thestock exchange index (BIRS) almost fullyrecovered at the end of the year after thesignificant decline in the first half of the year, thusending year with the 3.5% loss.At the BLSE, we have understood the crisis as anopportunity to look at the real possibilities for thedevelopment of the capital market in the Republicof Srpska. Priority goals have been identified inthe newly adopted Stock Exchange developmentstrategy whose implementation should create anenvironment where the BLSE will become amodern service to investors and issuers which isintegrated into the regional capital market.Primary MarketAt the beginning of the year, the stocks of privatecompany that successfully completed the firstIPO in Bosnia and Herzegovina were listed on theBLSE. The significance of this event for the futuredevelopment of the capital market is greater thanit illustrates the amount of issue (BAM 0.86million). In the six secondary public offerings ofshares on the stock exchange has been raisedBAM 7.3 million. BAM 17.7 million has beenborrowed through the three issues of municipalbonds and another BAM 2.1 million by bonds of amicro-credit institution. Six bonds issued by BrckoDistrict and two bonds issued by the Republic ofSrpska for the settlement of old foreign currencysavings and war damage in total value of BAM109 million were listed on the BLSE.New TechnologiesThe special attention has been given tostrengthen the technological basis of the BLSE,through the introduction of the FIX protocol in thestock exchange trading system and developmentof integrated trading systems for the brokeragehouses based on the FIX protocol. Thesesystems provide a completely new opportunity forinvestors in terms of ability to monitor in real-timetheir positions on the stock exchange and toexecute transactions. In future, new technologieswill be used to connect with other capital marketsin the region and for international datadistribution.International cooperationThe joint road-shows organized by the stockexchanges from the former Yugoslavia have beenthe most important international projects in whichthe BLSE was participated in 2009. At roadshowsin Belgrade and Vienna, Telekom Srpsketogether with 30 companies from six othercountries was presented to investors. Incooperation with the Vienna and Sarajevo SE thefirst investible index that includes shares ofcompanies from the Republic of Srpska andFederation of BiH was created. The index shouldserve as a basis for creating the first derivativeson the domestic securities by foreign investmentinstitutions. Together with other stock exchangesthe first steps were made towards linking marketsthrough brokerage house cooperation within theregion. This regional cooperation will be based onthe use of advanced technological solutions.Data DistributionThe availability of data on securities listed in theRepublic of Srpska has significantly increasedafter the final implementation of ISINs. Data fromthe BLSE is available in real-time through tenvendors such as; Thomson Reuters, Bloomberg,SIX Telekurs, TeleTrader Europoint, etc. Significantnews in the field of data distribution is related toan agreement with the Vienna SE. According toagreement the Vienna SE undertakes themarketing and distribution of BLSE data in thefuture as part of data-feed package in which areincluded data from the Vienna, Budapest,Ljubljana, Prague, Bucharest and Sarajevo SE.Corporate governanceThe valuation of securities is in direct correlationwith the view that investors have about the qualityof corporate governance in the companies.Therefore, the development of corporategovernance will permanently remain one of themost important priorities of the BLSE. Therefore,the BLSE together with the International FinanceCorporation (IFC), has created a scorecard; a toolfor monitoring the implementation of standards ofcorporate governance in accordance with theOECD principles. In cooperation with the AthensSE seminars for companies dedicated to themost important aspects of corporate governancelisted the official market were organized. However,we believe that the greatest contribution to thedevelopment of corporate governance in theRepublic of Srpska is our ongoing commitment tothe transparency and disclosure of detailedinformation on companies and investment fundsat our web pages. With this approach wemanaged to position the BLSE in the region as astock exchange that pays the most attention inproviding the investors with sufficient information.EducationUnderstanding trends in capital markets implies aseries of theoretical knowledge and practicaldisciplines. Therefore, we always point out thatthe formal education needs to pay greaterattention in educating young people in the area offinance. We have not stopped on that, but incooperation with the Republic of SrpskaPedagogical Institute we have begun a series ofeducational projects such as; organization ofseminars for teachers, publishing a manual forteachers in financial markets, organizingcompetitions for high school and universitystudents through a virtual stock exchange. TheBLSE its understanding of socially responsiblebehavior showed by creating a specific webapplication for the practical teaching ofaccounting that is available to all students of highschools of economics in the Republic of Srpska.At the same time, in cooperation with theChamber of Commerce we have designed basicand advanced seminars for investors which willbe periodically organized in the future.Profit achieved in a complex businessenvironment is an indicator of stability ofoperations, is a clear sign that the BLSE cancontinue to pursue its strategic developmentobjectives.HISTORY AND DEVELOPMENT15.07.1998 The adoption of the Law onSecurities provided the necessary legalframework to establish the capital market of theRepublic of Srpska.09.05.2001 Eight banks and one companytrading in securities signed the Contract thatestablished the Banja Luka Stock Exchange.14.03.2002 The first trading session took place.20.08.2003 The first auction for state ownedcapital took a place on the BLSE.03.05.2004 BIRS – The Stock Exchange Index ofRepublic of Srpska established.01.08.2004 FIRS - The Investment Fund Index ofRepublic of Srpska established.PAGE 6017.09.2004 Full membership to <strong>FEAS</strong>.01.01.2006 ERS10 - Index of ten companies fromElectric Power System of Republic of Srpska wasestablished.20.03.2006 Introduction of continuous trading inshares from the Free Market which fulfill theliquidity criteria.18-19.05.2006 First International Conference ofthe BLSE was held.29.01.2007 Correspondent membership to WFE.22.11.2007 Correspondent membership to FESE.24.06.2008 The BLSE real-time data started to bedistributed by the Bloomberg.09.3.2009 New trading system (BST 2.4) thatsupports FIX protocol was implemented.04.08.2009 The BLSE real-time data available viaThomson Reuters.FUTURE OUTLOOKIn 2010 the BLSE plans to:• Increase the market liquidity• Increase the quality and quantity of securitiesoffered to investors• Increase the efficiency of the stock exchangetrading system• Support the primary market development• International promotion of domestic capitalmarket to foreign investors• Implement systemic approach to education• Maintain partnership with capital marketinstitutions and listed companies
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2010BANJA LUKA STOCK EXCHANGEOFFICIAL 6 MONTH STATISTICSUS$ millions# Shares millionsTotal Volume Average Daily Volume Total Volume Average Daily VolumeStocksJul-09 1.70 0.07 5.88 0.26Aug-09 2.13 0.10 5.42 0.26Sep-09 2.94 0.13 5.73 0.26Oct-09 3.06 0.14 3.52 0.16Nov-09 2.27 0.11 6.02 0.29Dec-09 5.19 0.23 17.21 0.75TOTAL 17.30 0.13 43.78 0.33BondsJul-09 0.96 0.04 3.20 0.14Aug-09 1.50 0.07 4.67 0.22Sep-09 2.49 0.11 6.24 0.28Oct-09 1.65 0.08 4.33 0.20Nov-09 3.19 0.15 10.00 0.48Dec-09 5.69 0.25 19.33 0.84TOTAL 15.49 0.12 47.77 0.36OtherJul-09 0.00 0.00 0.00 0.00Aug-09 0.00 0.00 0.00 0.00Sep-09 0.00 0.00 0.00 0.00Oct-09 0.00 0.00 0.00 0.00Nov-09 0.00 0.00 0.00 0.00Dec-09 0.00 0.00 0.00 0.00TOTAL 0.00 0.00 0.00 0.00MarketCapitalization(US$ millions)IndexMONTHLY STOCK VOLUME VS INDEX(US$ millions)StocksIndexMONTHLY MARKET CAPITALIZATION(US$ millions)Jul-09 2,563.45 682.87Aug-09 2,746.69 744.15Sep-09 2,877.23 776.18Oct-09 2,909.85 776.50Nov-09 2,962.72 778.91Dec-09 2,820.76 728.68CONTACT INFORMATION6543210800 3,0007002,5006005002,000400 1,5003001,00020010050000Jul Aug Sep Oct Nov Dec Jul Aug Sep Oct Nov DecContact Name Mr. Nebojsa Vukovic E-mail blberza@blic.net Website www.blberza.comPAGE 61
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