JUNE 2013 - FEAS

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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013PALESTINE EXCHANGETechnological Developments• Developed and launched a comprehensivefinancial and administration system (ERP)• Projects in the pipe line: the PEX tradingsystem, “IFSAH” disclosure system,Business Process Management system(BPM).Data Dissemination• Signed many data disseminationagreements with local, regional andinternational bodies. Disseminatedinformation includes trading information,statistical reports, listed companies’disclosures and corporate actions, as wellas the PEX news and press releases. allmentioned information is also publishedon the PEX website (www.pex.ps),face book page (www.facebook.com/PalestineExchange) and the market watch.THE PALESTINIAN POLITICAL ANDECONOMICAL SITUATION IN 2012A major achievement on the political scenein 2012 was the promotion of Palestine tononmember Observer State during the UNGeneral Assembly in November. Howeverthe Israeli occupation and its restrictions onpeople, trade and resources, in addition tothe expansion of settlement activities remainthe main obstacle that hinders the Palestinianeconomy.Nevertheless, Palestine’s economy, stockexchange, listed companies, infrastructure, andbanking system are ahead many of their peersin the MENA region. Palestine starts from a lowbase but, by consensus of all major forecasters,it is likely to have one of the world’s highestgrowth rates.The Palestinian economy is lead by the privatesector. The private sector has proven to beresilient over the years and has been able toovercome various challenges and obstaclesimposed by the Israeli occupation mainly ontrade and freedom of movement. The GDPhas risen 50 percent since the beginning of2007. GDP in the first three quarters of 2011grew by 6.1 percent, and the Palestinianeconomy continues to demonstrate exceptionalendurance and adaptation capabilities.Description Q3/2012GDP Growth 6.1%GDP per capita 2.9%Unemployment percentage 23%QUARTERLY GDP IN THE WEST BANK AND GAZA STRIP 2007-2012 IN MILLIONS1,800.001,700.001,600.001,500.001,400.001,300.001,200.001,100.001,000.00900.00Q1 2007Q2 2007Q3 2007Q4 2007Q1 2008Q2 2008Q3 2008Q4 2008Q1 2009Q2 2009Q3 2009Q4 2009Q1 2010Q2 2010Q3 2010Q4 2010Q1 2011Q2 2011Q3 2011Q4 2011Q1 2012Q2 2012Q3 2012Key Information ContactsPalestine Capital Market Authority www.cma.gov.psMinistry of Finance www.mof.gov.psMinistry of National Economy www.met.gov.psPalestinian Investment Promotion Agency www.pipa.gov.psPalestine Monetary Authority www.pma-palestine.orgPalestinian Central Bureau of Statistics www.pcbs.org.psPalestinian Economic Council for Development and Reconstruction www.pecdar.orgPalestine Institute for Financial & Banking Studies www.pifbs.comPalestine Media Center www.palestine-pmc.comCustodian Bank - HSBC Bank Middle East www.middleeast.hsbc.comCONTACT INFORMATIONContact Name Mr. Ahmad Aweidah E-mail Ahmad.aweidah@pex.ps Website www.pex.psPAGE 76
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013SARAJEVO STOCK EXCHANGEAn increase in turnover for the second yearrunning as the mutual trading platformlooms on the horizon.Tarik KurbegovicCEOFamiliar problems continued to plague thecapital market in Federation of Bosnia andHerzegovina throughout 2012. Occasionalpolitical instability, weak attempts by thestate to attract foreign investments and asluggish approach to implementing muchneeded reforms are common obstacles in ourcontinued search for a stable capital market.Nevertheless, the turnover continued the risingtrend from 2011, and improved cooperationwith Government resulted in several treasurybills and bonds auctions which significantlyboosted the yearly turnover. Also, Governmentinitiative led to the creation of five-year Strategyfor developing the capital markets, in which allcapital market stakeholders had participated.A long standing idea came into fruitition inOctober 2012; an agreement on mutual tradingplatform of Sarajevo, Banja Luka and Podgoricastock exchanges has been signed in Sarajevo,during 7th International SASE Conference. Afurther efforts by the staff of all three exchangesshould result in the implementation of thePlatform in 2013.Together with implementing and improving thenew trading and surveillance measures thatwere passed in 2011, SASE also prepared forthe changes in Securities Law, which resulted innew set of changes to the SASE Rules.We look to 2013 with optimism and eagernessto step up to the challenge of making a hugestep towards more advanced and stablecapital market in Federation of Bosnia andHerzegovina.HISTORY AND DEVELOPMENTThe Sarajevo Stock Exchange (SASE) wasfounded in September of 2001 by eightbrokerage houses and commenced tradingon April 12 of 2002. The SASE is a jointstockcompany and a central marketplacefor securities trading in the Federation ofBosnia and Herzegovina. The SASE currentlyhas 12 members, whose headquarters arespread around the Federation of Bosnia andHerzegovina, the majority being in the capital,Sarajevo. Trading on SASE is performedelectronically through an order driven electronictrading system BTS (Stock Exchange System).SASX-10 is the main index on the SarajevoStock Exchange. It reflects the price movementof the top 10 issuers on the Sarajevo StockExchange (excluding investment funds) rankedby market capitalization and frequency oftrading. In 2009 a segmentation of Free marketwas performed, creating four new subsegmentswhich proved to be helpful for investors’understanding of the market.Turnover on SASE has risen substantially, whichcan be illustrated by the fact that in 2007 itrose up to US$ 961.5 million - more than in2005 and 2006 combined. There were 4 mutualfunds founded in 2007, and more are currentlyin preparation. In 2009 as a result of globalfinancial crisis sharp decrease in turnoveraffected SASE where we finished the year withUS$ 153,7 million. The effects of financial crisiswere even more strongly reflected in 2010, sothat annual total turnover on SASE was US$74,9 million.In 2011, the amount of the total turnover wasUS$ 165 million, and regarding to 2010, it wasan increase by 125% In 2012, the turnover wasincreased by 49% to 247 million (up to 14thDecember), largely thanks to treasury bills andbonds auctions by the Federation government.BIFX, the index that follows the prices ofinvestment funds, was the only one that finishedthe year in the positive zone.FUTURE OUTLOOK2011 and 2012 represented slow steps ona road to recovery from 2008-10 crisis, andwe hope 2013 will continue on the samepath. A new arrangement with IMF meansthat government debt securities auctions willprobably constitute smaller part of overallturnover, but we expect that governmentwill help the capital market in other ways:especially defrozing the privatization process ofcompanies in which state has a minority stake.SASE will keep up the effort to educate thedomestic investors, which still do not participateenough in trading. Special emphasis will be ongovernment bonds, whose turnover still doesnot match the high yields those bonds aregiving.As for the foreign investors, we expect to seepositive impact from the common tradingplatform with Banja Luka and Montenegroexchanges, as well as from Istanbul StockExchange’s ownership in SASE.BOSNIA AND HERZEGOVINAECONOMY1. Bosnia and Herzegovina’s (BiH) pasteconomic growth relied increasingly ondomestic demand as the key driver.Private sector demand expansion was fuelledby a credit boom financed from abroad. Thisproduced strong output growth amid a benignexternal environment and ample bank financing.However, the associated vulnerabilities becameclear in the 2009 crisis when capital inflowscame to a stop. Against this backdrop, thecurrency board arrangement, fiscal tightening,and financial support under the 2009 SBAhelped safeguard macroeconomic stability (Box1). But this has not been enough to propel theeconomy forward—staff projects that real GDPwill not regain its 2008 level until 2013. Structuralimpediments continue to hamper economicperformance—the large government crowds outthe private sector and the business environmentdiscourages investment and businessexpansion, leading to high unemployment andlow labor force participation.2. The protracted political crisis slowedreforms and progress toward EUaccession.The long delay in the formation of a newState-level government and the breakdownin national policy coordination following theOctober 2010 elections—evidenced by thedifficulty in reaching an agreement on thebudget for the Institutions of BiH and thetemporary interruption in the servicing of BiH’spublic debt to some IFIs in early-2012— stalledeconomic reforms and progress toward EUPAGE 77
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JUNE 2013 - FEAS

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