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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2010FEDERATION OF EURO-ASIAN STOCK EXCHANGESThe future outlook for our markets seems todepict that our member markets continue toprovide competitive and viable financingoptions to both public and private sectors.Huseyin ErkanPresident of FEAS & Chairman andCEO of the Istanbul Stock ExchangeAfter the most severe global recession fordecades, most of the economists now expecta sustained recovery in the global economy. Infact, some major economies have exited fromrecession in the second and third quarter of2009 by burst of global monetary and fiscalstimuli. After contracting by 2.1% in 2009,global real GDP is forecasted to expand by3.2% in 2010. Within this context, anothersignificant expectation is the differential ineconomic growth between developed (2.1%)and emerging economies (5.7%). Yet,conservative recovery forecasts still reflectconcerns about credit availability and themedium-term fiscal outlook in the developedcountries. As regards to the average GDPweightedpublic-debt-to- GDP ratio indeveloped markets and emerging markets, itis obvious that many developed countrieshave moved into unchartered territory over thepast couple of years. While the emergingcountries’ public debt stock climbed to around44% of GDP in 2009 from just 35% in 2006,the developed countries debt ratioskyrocketed from less than 80% to around95% of GDP .Even though developed countries felt theburden of the crisis most heavily in 2008, thedomino effect of the crisis on the developingmarkets of FEAS were felt in 2009. During2009, the FEAS region’s financial marketshave performed in excess of world marketswhen you compare the performance of theFEAS Index to that of the Dow Jones WorldIndex (i.e. 52% vs. 30% increase respectively).While the market capitalization of the FEASregion has increased by 35% in 2009, theaverage daily trading volume is down by15.3%. (We have included a special sectionafter the FEAS pages that review the growth ofour markets over the past 15th years.)On the verge of completing the fifteenth yearof its operations, the FEAS accomplishedsome noteworthy achievements such asimplementation of the Dow Jones FEASIndexes and production of the FEAS movie.The FEAS Index is the first benchmark tomeasure the performance of companiesacross the Euro-Asian region. It covers 95% ofthe free-float market capitalization of eachcountry in the respective index. Actually, threeindexes were launched on June 2009, onecomposite, and two regional sub-indices. TheIndices are designed to underlie index-linkedinvestment products such as funds andstructured products. The FEAS CompositeIndex currently includes 375 stocks from 12 ofthe 33 member exchanges, including AbuDhabi, Amman, Bahrain, Belgrade, Bulgaria,Istanbul, Karachi, Macedonia, Muscat,Sarajevo and Zagreb. Our aim is to launch aninvestable blue chip index in the forthcomingyears.During 2009, the FEAS jointly hosted with itsmembers three meetings and conferences.These were the Executive Committee Meetingand Working Committee Meeting held inMinsk, Belarus in June; the 15th FEAS GeneralAssembly Meeting and Executive CommitteeMeeting held in Budva, Montenegro, togetherwith the Exchange Traded ProductsConference hosted by STOXX in September;furthermore in October a meeting of the PostTrade Affiliate Members of FEAS was held inAntalya, Turkey. Besides these meetings, theFEAS Secretariat continues to pursue activitiesthat will promote the growth of member stockexchanges operations such as bilateral visits,workshops and seminars held by the FEASTraining Center, and the joint ISE/FEASprojects with international associations andorganizations such as the UNPRI, WorldFederation of Exchanges (WFE) and otherInternational Organizations.Our renewed commitment to the revised FEAS5-year strategic plan is also designed toachieve the objectives as specified in themission statement of the Federation and to geta more vital role in the global marketenvironment. During the next five years, ourfocus will be more on promoting “corporategovernance”, facilitating timely disclosure,encouraging convergence among FEASMembers, promoting mechanisms for reliable,transparent and uninterrupted securitiestrading and settlement, creating greaterrecognition and visibility for the region’ssecurities and investment opportunities,encouraging the listing of “investment grade”securities in the respective home markets ofthe Region, encouraging foreign investorparticipation in Member Markets, promotinglinkages among the Region’s intermediaries,data vendors, settlement and custodyinstitutions, exchanges; and also encouragingcooperation among Region’s Regulators,promoting and encouraging research activitiesand training for FEAS Members and theirpersonnel and assisting FEAS Members toincrease financial literacy through publicawareness.I would like to take this opportunity to extendmy heartfelt thanks for their contributions toBloomberg, Central Registry Agency, FinansAsset Management, Garanti Asset Management,IS Investment, Muscat Securities Market,NASDAQ OMX, Takasbank, Tayburn Kurumsaland The Association of Capital MarketIntermediary Institutions of Turkey for makingthis publication possible. We hope that you willtake a moment to visit our contributor sectionin the FEAS website at www.feas.org and readtheir articles in the following pages.The future outlook for our markets seems todepict that our member markets continue toprovide competitive and viable financingoptions to both government and privatesectors, while enhancing operations throughtechnology and expanding the services offeredto market participants. We surely continue tofocus on the areas of increased transparencythrough investing in infrastructure anddeveloping regulations to promote strongerenvironmental social governance. The effortsof all our Task Force Members will surely playa vital role in achieving our objectives throughtheir commitment and hard work and theSecretariat for maintaining our cohesiveorganization. As we close our 15th year, welook to the future with a renewed sense ofpurpose and a detailed strategy for achievingour goals.PAGE 3