JUNE 2013 - FEAS

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013BELGRADE STOCK EXCHANGEGordana DostanicManaging DirectorThe total turnover of the Belgrade StockExchange in 2012 amounted to 219.7million EUR, while the average dailyturnover was 875.5 thousand EUR.Positive market perception by investorsduring the second half of 2012 resulted by theincrease in the volume of investment activitieson the Stock Exchange and the growth ofturnover and rise in values of both of indices,BELEX15 and BELEXline. Value of the BELEX15as indicator of movements of the most liquidshares was increased in 2012 year by 4.98percent, while the growth of the general indexof domestic capital market BELEXline was2.90 percent. Confirmation of intensifying tradeactivities in the second half of the year canbe also found in the increase of the marketcapitalization of the Stock Exchange. On thelast trading day in 2012, market capitalizationstood at 6.8 billion EUR, regardless of the largenumber of securities excluded from the marketas result of the bankruptcy and liquidation, orchange in organizational form.During the second half of the year corporatebonds of the Societe Generale Bank Serbiawere admitted on the market and, throughthe primary market, bonds of the Erste BankNovi Sad. After the primary trading Erste bankbonds were included on the secondary marketof the Exchange, which contributed to theenlargement of the assortment on the BELEXdebt market. Primary trading of the Erste Bankbonds was also the first primary trading withsome financial instrument on the regulatedmarket since the 2003. This demonstrated theability to use the mechanism and technologyof BELEX for organizing primary trading ofsecurities.In the total annual turnover of the Exchangeforeign investors participated slightly less than50 percent, with the increase in the bondstrading, compared to the previous year.In the second half of November 2012, thetraditional Conference of the Belgrade StockExchange was held. During the Conferencetopics were actualized that were previouslydiscussed on the meetings organized bythe Exchange and which are related to thepossibilities of capital raising for the companiesthrough the capital market mechanisms - InitialPublic Offerings; about improving of the debtsecurities market; improvement of InvestorRelations and Corporate Governance etc.As a conclusion, we can notice that therecovery of the domestic market cannot beexpected without significant strategic decisionsoriented to create a more favorable investmentenvironment and encourage the companiesto use alternative models of financing (IPOprocess, financing through the public offeringsof corporate bonds and municipal bonds).HISTORY AND DEVELOPMENT• The Belgrade Stock Exchange held itsFounding Assembly on 21st November 1894and has come a long way since the firsttrading sessions held in January 1895 in thehotel „Bosna“ on the bank of the river Sava.• In its more recent history, significantimprovements of the BELEX tradingsystem were made in 2003 and 2004,when continuous and remote trading wereintroduced. The first index was published inlate 2004, and up to this day the Exchangehas continued to develop indicators. Sincethe beginning of 2008 the Belgrade SE hasbeen organizing the Roadshows. 2008 wasalso the year when the BELEXFIX informationsystem, was released, followed by theBELEX FIX API module implemented in early2010, which allowed members to developtheir own trading apps. The first shares ofpublic enterprises were listed in 2010. At theend of 2010 the first Award for the best IRwas awarded.The key highlights in 2012:• In March - a Platform for Joint Action by theExchanges of SE Europe was signed, aimedat improving cooperation and attractinginvestors to the region.• In May - new rules and regulation enteredinto force.• In June - BELEX IPO 2012 was held, incooperation with the Erste Bank and with thesupport of the Association of Serbian Banks;• In September - BELEX Day of ListedCompanies was held to promote listedcompanies;• In October - first primary trading of corporatebonds was held;• In November - the Best IR Award was givenfor the best IR in 2012 to NIS a.d Novi Sad.• In November - 11th International Conferencewas held.FUTURE OUTLOOKIn 2013 the BSE will focus on the followingactivities:• Promoting of IPO and listing opportunities forSerbian non-listed companies;• Boosting of the market-making function;• Improvement of educational activities andprograms for citizens and students fromUniversities in Serbia;• Organization of roadshows for domestic andinternational investors;• Further development of the existing indexesand indicators;• Exploring the possibilities of introducing newinstruments into the market;• Broadening the network of international datavendors;• Organization of specialized seminars aboutIR and corporate government for companiesin Serbia;• Improvement of media coverage of stockexchange activities;• Editing and publishing the new version ofmonthly Bulletin as well as the new edition ofpublication “Introduction to the stock marketoperations”;• Improving and widening the base ofcompanies and institutions that will beinvolved in granting the award for the best IRpractice in Serbia;• Survey of market participants about theirneeds and proposals for improving of theperformance of the Serbian capital market;• Organization of the 12th InternationalConference in November;• Modification of the BelexFIX systemaccording EU standards (new project,Luxembourg Government donation);• Work on developing it’s human resources.2012 COUNTRY OUTLOOKThough Serbian economy faced numerouschallenges in 2012, this year will be alsoremembered for the kick off of mass-productionof FIAT vehicles and South Stream Gas PipelineProject.The year was flavoured by the domesticpolitical turmoil, particularly during the firstnine months, which led to a setback of overalleconomy. Economic activity was additionalyweakened amid a difficult global environment.GDP contracted about 2 percent (estimation),with a modest recovery expected in 2013. Thefiscal deficit widened sharply in 2012 relativeto the original budget and to last year’s level isunsustainably large. Although during the firstquarter Serbia was approved with the candidatePAGE 31