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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2008BANJA LUKA STOCK EXCHANGEMilan BozicCEOIn 2007 total market capitalizationamounted to EUR 4 billion, which is anincrease of 3.86% compared to the end of2006.The capital markets of the Republic of Srpska(RS) were very dynamic in 2007. The stronggrowth in the first four months was followed bythe significant decrease of prices in thesecond part of 2007. It should be noted thatthis downward trend occurred after the sixyearof consecutive growth. The turnoveramounted to EUR 380 million, which is almostdouble as compared to the previous year. Forthe first time, the BLSE index (BIRS) recordeda decrease of 11.1%, ending at 2,564 points.Total market capitalization amounted to EUR 4billion, which is an increase of 3.86% ascompared to the end of 2006.The general understanding about the strongrelationship between the capital market andthe real economy performance has beenconsiderably improved. At the same time,significant improvements in the developmentof the official market have been achievedresulting in an increase in number ofcompanies and funds being listed on thismarket segment (40). For the first time twobank bonds were listed on the official market.2007 saw the transformation of 13 privatizationinvestment funds into close-ended investmentfunds. The total market capitalization of thesefunds reached EUR 240 million. Furthermore,the first open ended fund has beenestablished in the RS, signaling a plausibleturning point in the development of the fundindustry. Corporate disclosure has beensignificantly improved and for all companieslisted on the Banja Luka Stock Exchange(BLSE) markets, semi-annual financial reportsare available on the BLSE web page and forcompanies listed on the official marketquarterly reports are disseminated as well.In 2008, the first municipal and significantissues of government bonds should be listedon the BLSE markets. The launch of pensionsystem reforms will have a strong positiveimpact on the RS capital market development.Announced adoption of the Law on ReservePension Fund and the Law on Third PillarPension Funds should contribute to thestrengthening of domestic institutional demandon the Exchange. Through active participationin various regional projects the BLSE will striveto increase visibility of the RS capital markets.The planed introduction of FIX protocol in thesecond part of 2008 will improve accessibilityof the domestic markets to foreign investors.Finally, 2008 will see the first limited liabilitycompanies to raise capital on the Exchange.FUTURE OUTLOOKIn 2008 the BLSE plans to:• foster implementation of national corporategovernance standards;• introduce new market instruments on thetrading, such as long term government andmunicipal bonds;• encourage listings of successful limitedliability companies on the stock exchangemarket;• further develop relations with the issuerslisted on the stock exchange and promotebenefits of listing on higher market segments;• support to the development of open endedfunds through education and promotion of theirroles on the capital market• increase visibility of the BLSE market byproviding data-feed to the world knownVendors;• promote cooperation with the stockexchanges from the region and other part of theWorld;• continue with educational and promotionalactivities (International Conference of the BanjaLuka Stock Exchange);• introduce upgraded version of trading systemwhich will further improve flexibility of tradingand• launch fix protocol.CONTACT INFORMATIONContact Name Mr. Nebojsa VukovicE-mail blberza@blic.netWebsite www.blberza.comPAGE 38