JUNE 2013 - FEAS

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013ZAGREB STOCK EXCHANGEZagreb Stock Exchange will continue itswork on encouraging issuers to raise capitalthrough the stock exchange, developing newproducts and services such as short sellingand certificates, maintaining market integrityand investors’ confidence as well as providinga reliable mechanism for funding the growthof Croatian economy and raising awarenessabout the importance of capital markets asone of the most significant factors in economicdevelopment.Positive moments undoubtedly persist butcertain risks remain, challenging sustainablemarket recovery and Zagreb Stock Exchangewill carefully observe global as well as regionaleconomy and equity market trends and remainin line with market expectations in order tobecome the market of choice in the region.CAPITAL MARKET DEVELOPMENTAND ECONOMIC OUTLOOKAfter the downgrade of Croatia to subinvestmentgrade (S&P, Moody’s), pressure onpolicy makers is even stronger to implementthe consolidation on the expenditure side of thebudget, to halt the unsustainable public debtgrowth dynamics and to address the problemof structural rigidities in order to increasecompetitiveness of Croatian economy.The Croatian market is one of the smallermarkets by international standards.Nevertheless, we expect that the importanceof the ZSE will increase in light of Croatia’simpending accession of the European Unionand consequently there should be a rise intrading volumes, the historically low level ofwhich is currently putting off non-residents fromlarger portfolio investments. The upcomingprivatisations will also have a benign impact onliquidity, as there is still plenty of potential in thisfield.Although significantly changed circumstancesin the European market (e.g. recession,debt crisis) surely limit the positive effects ofmembership, we think that Croatia will enjoymultiple benefits by joining the single Europeanmarket. These include higher inflow of capital,a stronger institutional framework, continuedreforms and fiscal adjustment.** Raiffeisenbank Austria d.d. ZagrebEconomic Research DepartmentKey Information ContactsCroatian Agency for Supervision of Financial Services www.hanfa.hrMinistry of Finance www.mfin.hrCroatian Government www.vlada.hrCroatian National Bank www.hnb.hrCONTACT INFORMATIONContact Name Sanda Kuhtic Nalis E-mail sanda.kuhtic@zse.hr Website www.zse.hrPAGE 90