FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT JUNE 2012
SARAJEVO STOCK EXCHANGE
SASE attracted new shareholders and
for the first time in three years showed a
positive financial result.
Zlatan Dedic
General Manager
An unfavourable political environment, a low
level of Foreign Direct Investments, a non-
stimulative business ambient and unsatisfactory
commitment to economic reforms - all of these
factors did not contribute the development of
the capital market in the Federation of Bosnia
Hercegovina in 2011. Nevertheless, SASE
accomplished some significant improvements:
the trading result were significantly better
compared to 2010, the BIFX and SASX-30
indices had a positive annual return, and
important measures to the development of
the market have been undertaken; the Stock
Exchange attracted new shareholders and for
the first time in three years showed a positive
financial result.
HISTORY AND DEVELOPMENT
The Sarajevo Stock Exchange (SASE) was
founded in September of 2001 by eight
brokerage houses and commenced trading
on April 12 of 2002. The SASE is a joint-
stock company and a central marketplace
for securities trading in the Federation of
Bosnia and Herzegovina. The SASE currently
has 12 members, whose headquarters are
spread around the Federation of Bosnia and
Herzegovina, the majority being in the capital,
Sarajevo. Trading on the SASE is performed
electronically through an order driven electronic
trading system BTS (Stock Exchange System).
SASX-10 is the main index on the Sarajevo
Stock Exchange. It reflect the price movement
of the top 10 issuers on the Sarajevo Stock
Exchange (excluding investment funds) ranked
by market capitalization and frequency of
trading. In 2009 was performed a segmentation
of Free market on the Primary Free market, the
Secondary Free market and the Market for the
issuers in the bankruptcy proceedings.
The annual turnover was positively influenced
by two successful treasury bill auctions through
which the Federation collected over 90 million
KM through the market. Significant efforts by
the staff in 2011 led to the implementation
of new measures aimed at development of
the market and to shrink the gap vis-a-vis
the developed markets. Amongst the most
important one was the mass-delisting of low
liquid and non-transparent securities from the
market, more stringent listing requirements,
the possibility to delist securities if the
issuer neglects its disclosure requirements,
introduction of volatility interruptions and the
change of the static price limits. Besided measures for a more thorough
surveillance over the trading process and
especially the business operations of the
trading members (Red Flags, investors
black book, restricted accounts etc.), SASE
implemented also the surveillance of the IT-
system of the trading members.
Turnover on SASE has risen substantially, which
can be illustrated by the fact that in 2007 it
rose up to US$ 961.5 million - more than in
2005 and 2006 combined. There were 4 mutual
funds founded in 2007, and more are currently
in preparation. In 2009 as a result of global
financial crisis sharp decrease in turnover
affected SASE where we finished the year with
US$ 153,7 million. The effects of financial crisis
were even more strongly reflected in 2010, so
that annual total turnover on SASE was US$
74,9 million. FUTURE OUTLOOK
In 2011, the amount of the total turnover was
US$ 165,7 million, and regarding to 2010,
is increased by 125,50% - if we exclude the
primary emissions, then it is an increase of
41,72%; indices BIFX and SASX-30 are in
positive zone; it was taken a series of measures
to improve the capital market; SASE has
received the new shareholders in the process of
recapitalization, and after three years in losses,
SASE ended 2011 with a profit of US$ 49.038.
The year behind us was a hard but successful
year. Before us lies another year filled with
challenges to advance the quality of the
capital market in the Federation of Bosnia-
Hercegovina, to which we look in confidence
and optimism.
In 2011, for the first time since the beginning of
the crisis of 2007, the trend of ever falling yearly
turnovers was broken. Even without the turnover
from the primary auctions for government
treasury bills, the turnover in 2011 was 42%
higher than in the previous year. In 2012, we
expect to see more government debt securities
on the market, including long-term bonds and
short term treasury bills. Given the high excess
liquidity of the banking market, we do not expect
a great deal of secondary trading with these
securities, at least not in the first half of the year.
Although announced each year, we have
reasons to believe that in 2012 we will see
the privatization of some companies where
the state has at least a minority stake. The
need to finance the budget deficit will make
it necessary for the state to sell their stake in
some companies, despite the current crisis on
the markets and the low interest of investors.
We also see the potential that the state will take
a greater role in the development of the financial
markets in general, and the capital market in
special in 2012. For the first time in ten years,
representatives from the government are taking
an active role in defining a strategy for the
development of this segment of the Bosnian
economy.
In 2012, SASE will put emphasis on the
education of domestic investors, who still are
hesitant to engage in securities trading.
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