JUNE 2013 - FEAS

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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013NASDAQ OMX ARMENIAFUTURE OUTLOOKIn 2013, NASDAQ OMX Armenia plans to:• continue improving the technicalinfrastructure of the stock exchange and thecentral depository;• continue expanding the range of servicesprovided to listed companies and tradingmembers;• provide complex exchange services infinancial market;• carry on with efforts to promote initial publicofferings of equities in the Armenian market;• continue efforts towards increasing publicawareness of the Armenian securities market.CAPITAL MARKET DEVELOPMENTAND ECONOMIC OUTLOOKAfter several years of double-digit economicgrowth, Armenia faced a severe economicrecession with GDP declining more than 14%in 2009, despite large loans from multilateralinstitutions. Sharp declines in the constructionsector and workers’ remittances, particularlyfrom Russia, led the downturn. The economybegan to recover in 2010 with 2.1% growth,and picked up to 4.6% growth in 2011, beforeslowing to 3.8% in 2012.In 2012 according Doing Business 2013’s recentreport Armenia advanced from 50th to 32ndposition among 185 countries. According to thisreport, Armenia improved some of its indicators,in particular, “provision of construction permits”(46th), “electricity supply (101st)”, “protection ofinvestors” (25th), and “taxation” (108th). Also,regress with regard to the following indicatorswas recorded: “registration of enterprises”,“loans”, “international trade”.Capital Market DevelopmentsIn 2012 stock market preserved positive growthtrend with value traded reaching up to US$1.02 mln, almost doubling the previous year’svolumes. Market capitalization as of year endreached US$ 132.1 mln, slightly decreasingover the same of 2011. Corporate bonds marketsaw 41% reduction in volumes with total valueamounting to US$ 1.03 mln. REPO tradingalso saw 6.6 times reduction of value tradedto US$ 929 thsnd. Government bonds marketwas rather active in 2012 with value traded ofUS$ 10.4 mln. Structure of government bondstrading also changed this year: 11% fell tothe share of trading in short-term governmentbonds, 24% - in long-term government bondsand 64% - in mid-term government bonds.Value traded in foreign currency market wasUS$ 752mln, exceeding the previous year’svolumes by 7%. Credit resources market sawvalue traded of US$ 15.1 mln in 2012. This yearaverage monthly value traded amounted to US$1.3 mln, 2.2 times exceeding the same of theprevious year. Weighted average rate of creditresources varied within maximum of 11.3% andminimum of 4%.In 2012 range of instruments, offered inArmenian capital market was enhanced toinclude credit contracts with maturity of 7days, as well as foreign currency nominatedcorporate bonds, issued by local companies,which is quite importaint development in termsof fostering attraction of foreign investments toArmenian capital market.Regional cooperation was also kept in thefocus and in October, 2012 the 1st Armenian-Georgian Financial Markets Forum was heldin Armenia, attracting 57 officials from over 30companies, operating in financial sectors ofArmenia and Georgia, including representativesof international organizations. The Forumcovered recent developments in Armenian andGeorgian financial systems, features of eachmarket’s infrastructure and regulatory issues,Armenian pension reform and its expectedimpact on capital markets. Forum participantsalso discussed issues and ways of mutualcooperation, noting that financial sectors of bothcountries should be developed jointly, based onnew technological solutions.The expected launch of new second pillarpension system in Armenia in 2014 will boostthe activity in the capital market, so theDepository worked closely with the Governmentof Armenia and the Central Bank of Armenia tocreate necessary preconditions for introducingthe reform and servicing pension accounts andcustodian information system.Key Information ContactsNASDAQ OMX www.nasdaqomx.comThe Central Bank of Armenia www.cba.amThe Central Depository of Armenia www.nasdaqomx.amCONTACT INFORMATIONContact Name Ms. Eugenia Evoyan E-mail eugenia.evoyan@nasdaqomx.am Website www.nasdaqomx.amPAGE 74
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013PALESTINE EXCHANGEAhmad AweidahCEOListing the Palestine Securities Exchangeis a milestone. The PEX is the only Arabexchange that is fully owned by the privatesector and the second Arab exchange tobe listed.Listing the Palestine Exchange in 2012 wasa landmark event. This listing enhances thePEX governance and puts it ahead many peerexchanges in good corporate governancepractices.The political and economic turbulencethat Palestine witnessed in 2012 and itspsychological ramifications on investors havenegatively affected trading volume, whichdropped by 25 percent in 2012 compared to2011. In 2012, the PEX traded about 150 millionshares valued at 274 million US Dollars. The Al-Quds index closed the year 2012 with a slightincrease of 0.14 percent compared to 2011,and market Cap of listed companies increasedby 2.76 percent for the same year.2012 saw generous dividend distribution forthe fiscal year 2011 underlining the outstandingperformance of many PEX listed companies;70 percent of listed companies were profitablein 2011, cash dividends amounted some 120million US dollars, with an average return oninvestment of 6.09 percent for the same year.The PEX continued investing in its technologicalsystems and infrastructure. In 2012 wedeveloped and launched a comprehensivefinancial and managerial system (ERP).Projects in the pipeline also include “IFSAH”disclosure system and a new Business ProcessManagement system (BPM) which should becompleted in 2013.I wish success to all exchanges and I hope wewill all see growth in 2013.HISTORY AND DEVELOPMENT• 1995: Established as a private shareholdingcompany to promote investment in Palestine.• 1997: First trading session (18 February).• 2005: The Al-Quds Index had increasedby 306% compared to 2004, recording thehighest amongst the world Stock Exchanges.• 2006: Launch of the Investor EducationProgram.• 2007: Launch of E-Trade Service.• 2009: Ranked 33rd amongst InternationalStock Exchanges and 2nd in the region interms of investor protection.• 2010: Became a public shareholdingcompany.• 2011: Listing a record seven newcompanies.• 2012: Listed company. (4 April)FUTURE OUTLOOKThe PEX seeks to develop Palestine’s capitalmarket and to enhance its qualitative presenceamongst its regional and international peers. Weaim to:• Strengthen market governance throughimproving our legislation, regulation,systems, operational procedures,information security, and internal auditmechanisms in keeping with best practice.• Enhance our relationship with the PCMA,member brokers, the listed companies andother stakeholders to provide premiumtimely responses to investor needs andmarket evolution.• Increase Market depth and expand ourinvestor base, through:--Completing the listing of public shareholdingcompanies, and continuing our educationaloutreach to qualified family-owned firms.--Including the exchange in the MENA frontiermarket indices such as those provided byMSCI, S&P and FTSE).--Encouraging Diaspora Palestinians to investin Palestinian listed companies.--Further enhance our continued outreachcampaigns and road shows towardspromoting PEX to institutional and retailinvestors (local and regional).• Diversify our sources of income through:--Expansion of our central depository services.--Developing better data disseminationchannels and building an online trading andcompanies database.• Strengthen our relationship with regionaland international markets, and to obtainfull membership of the World Federation ofExchanges (WFE).• Promote the development of effective, bestpractices for corporate governance andinvestor relations in Palestinian companies.Accomplishments 2012Two New Listings during:CompanynamePalestineSecuritiesExchangePALAQAR forReal EstateDevelopmentandManagementTradingSymbolListingDateSectorPEX 04/04/2012 BankingandFinancialServicesSectorPALAQAR 03/07/2012 ServicesSectorEvents• Convened the Sixth Annual PalestinianCapital Market Forum entitled: “BrokerageIndustry, Current Challenges & FutureProspects”, November 2012. (For moreinformation, please visit www.facebook.com/FEXForum6).Publications• Listed Companies Guide.• “Road to IPO” (CD) Guide.• The Quarterly Souq El-Mal Magazine (aspecialized magazine in capital markets).• Monthly Investor Newsletter.• The PEX Annual Report.• Daily, weekly and monthly statistical report.Investor Education• Continued the Stock Simulation competitionin nine national universities.• Educational session to schools anduniversities students at the PEX premises.Training Courses• The following training courses wereconvened with the participation ofemployees from the capital market sector:• Strategy and Portfolio Management, July2012.• Financial Broker course, September 2012.• Investor Relations and CorporateCommunication Best Practices course,November 2012.Investor Relation• Launched the Palestine Chapter of theMiddle East IR Society (MEIRS), February2012.• Established the PEX Investor RelationsSection.• Chairwoman of the Palestine Chapter ofMEIRS Ms. Fida Musleh/Azar, also Managerof Public Relations and Investor EducationDepartment at the PEX, received the“Outstanding Individual Contribution to IR”award, which was presented during theAnnual Conference of Middle East InvestorRelations Society in Abu Dhabi, November2012.CDS Development• Obtain a full member at the Association ofNational Numbering Agencies (ANNA).• Obtain the privilege from the Association ofNational Numbering Agencies (ANNA) to bea PRE-LOU (Local Operating Unit).PAGE 75
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