FEAS Yearbook FEAS Yearbook 2013 | Page 64

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013 MACEDONIAN STOCK EXCHANGE In 2012, market capitalization of the 32 listed companies was around 421 million euros. Ivan Steriev CEO In 2012 the trend of negative movements of the key stock market indicators continued at MSE. During this year 14,905 transactions were executed compared to 23,426 in 2011. The market in 2012 was significantly reduced if we consider the total turnover (around 91 million Euros) which represents a decrease of 59% compared to 2011. However, the fact that there were no big block trades executed in 2012 (unlike the two block trades with Skopje brewery in the amount of almost 80 million Euros in 2011), should be taken into consideration. Therefore, by adjusting the turnover in 2011 (i.e. the value of these block trades to be excluded), reduction of turnover in 2012 amounted to more objective 36%. The average daily turnover was around 370,000 Euros. The turnover through the MSE electronic trading system - BEST, which is the most relevant indicator of the market activity, was around 20% lower compared with 2011. Market HISTORY AND DEVELOPMENT The Macedonian Stock Exchange was founded on September 13, 1995 and commenced trading on March 28, 1996, as a central marketplace for trading in securities and the first organized stock exchange in the history of the Republic of Macedonia. Its mission is to provide attractive, efficient, transparent and secure functioning of the organized secondary securities market in the Republic of Macedonia. For its 17 year history, the Macedonian Stock Exchange has managed to establish a sound market and information infrastructure and a cohesive legal and regulatory framework, as well as solid expertise upon which the functioning of the Macedonian securities market is based. The MSE was founded as a not-for-profit joint stock company with founding capital of 500,000 Euros. According to the legislation that was in force in 1996 the only eligible founders of the MSE were banks and other financial institutions (saving houses and insurance companies). MSE initially had 19 members: 13 banks, 3 saving houses and 3 insurance companies. Starting PAGE 62 capitalization of the 32 listed companies was around 421 million euros i.e. decreased by 5% YTD and represents 5,4% of GDP. The main stock index MBI10 annually decreased by 12% and recorded value of 1731.18 points. Foreign investors accounted 11,6% of the total annual turnover on the buying side, and 21% on the selling side. These figures demonstrate that the situation in the Macedonian securities market is still complex, but also there is huge potential for re- growth. This conclusion comes from the current level of turnover and market capitalization. The comparison of the turnover with shares through the BEST system in 2012 (25.2 million euros) with the turnover in 2007 (471.4 million euros) is self-explanatory. At the same time, the share of market capitalization to GDP of just over 5% and comparative analysis with markets in many other countries show that there is from June 20, 2001 (with the amendments of the Securities Law), MSE started to operate on a for-profit basis, with a founding capital of 500,000 EUROs. MSE shareholders may be any legal and private domestic and foreign entity. All MSE members must be licensed for trading in securities by the Macedonian SEC. Only brokers, authorized by the MSE members may trade in securities at MSE. MSE currently has 15 members - 10 brokerage houses and 5 banks. Currently MSE has 36 shareholders (brokerage houses, banks, legal entities and private investors). FUTURE OUTLOOK Macedonian Stock Exchange: • In accordance with the latest amendments of the Macedonian Securities Law, a new process of mandatory listing of certain group of joint stock companies will be introduced. It is expected that number of listed companies to be doubled. These changes will contribute for increment the transparency of these joint stock companies and eventually to affect the huge potential for growth - whether through future price increases of the shares of listed companies, additional capitalization of current listed companies or new listings. Any positive combination of increased turnover and/or market capitalization will result in improvement of the MSE turnover ratio as well. We expect that the performance of the Macedonian stock market in 2013 will be at a similar level as in 2012, i.e. it is expected to operate in not very easily predictable and quite complex economic environment. What is certain is that starting from 2013 the working of the MSE will be positively affected by regulatory changes related to new process of mandatory listing of certain group of Macedonian joint stock companies and newly introduced tax holidays on capital gains for the next three years. trading on a middle and long term. • Implementation of joint program (by Securities and Exchange Commission, MSE and Macedonian Central Securities Depository) for education of investors and issuers of securities. • Analysis of the possibility for introduction of new financial instruments on the market and support of financial intermediaries in issuing such instrument, with stressing on development of debt and structured products. • Improving the market infrastructure through technical and normative developments of the MSE functionalities. • Support of the companies who will show interest in conducting a public offering via MSE. • Adoption of new methodologies for calculation of indices published by MSE. • MSE increase its participation on- going projects related to the implementation of the Memorandum of Partnership of exchanges in South East Europe and within regular activities of the Federation of Eurasian Stock Exchanges (FEAS).