FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT JUNE 2013
SARAJEVO STOCK EXCHANGE
An increase in turnover for the second year
running as the mutual trading platform
looms on the horizon.
Tarik Kurbegovic
CEO
Familiar problems continued to plague the
capital market in Federation of Bosnia and
Herzegovina throughout 2012. Occasional
political instability, weak attempts by the
state to attract foreign investments and a
sluggish approach to implementing much
needed reforms are common obstacles in our
continued search for a stable capital market.
Nevertheless, the turnover continued the rising
trend from 2011, and improved cooperation
with Government resulted in several treasury
bills and bonds auctions which significantly
boosted the yearly turnover. Also, Government
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 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 reflects 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 a segmentation of Free market
was performed, creating four new subsegments
which proved to be helpful for investors’
understanding of the market.
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.
initiative led to the creation of five-year Strategy
for developing the capital markets, in which all
capital market stakeholders had participated.
A long standing idea came into fruitition in
October 2012; an agreement on mutual trading
platform of Sarajevo, Banja Luka and Podgorica
stock exchanges has been signed in Sarajevo,
during 7th International SASE Conference. A
further efforts by the staff of all three exchanges
should result in the implementation of the
Platform in 2013.
In 2011, the amount of the total turnover was
US$ 165 million, and regarding to 2010, it was
an increase by 125% In 2012, the turnover was
increased by 49% to 247 million (up to 14th
December), largely thanks to treasury bills and
bonds auctions by the Federation government.
BIFX, the index that follows the prices of
investment funds, was the only one that finished
the year in the positive zone.
FUTURE OUTLOOK
2011 and 2012 represented slow steps on
a road to recovery from 2008-10 crisis, and
we hope 2013 will continue on the same
path. A new arrangement with IMF means
that government debt securities auctions will
probably constitute smaller part of overall
turnover, but we expect that government
will help the capital market in other ways:
especially defrozing the privatization process of
companies in which state has a minority stake.
SASE will keep up the effort to educate the
domestic investors, which still do not participate
enough in trading. Special emphasis will be on
government bonds, whose turnover still does
not match the high yields those bonds are
giving.
As for the foreign investors, we expect to see
positive impact from the common trading
platform with Banja Luka and Montenegro
exchanges, as well as from Istanbul Stock
Exchange’s ownership in SASE.
Together with implementing and improving the
new trading and surveillance measures that
were passed in 2011, SASE also prepared for
the changes in Securities Law, which resulted in
new set of changes to the SASE Rules.
We look to 2013 with optimism and eagerness
to step up to the challenge of making a huge
step towards more advanced and stable
capital market in Federation of Bosnia and
Herzegovina.
BOSNIA AND HERZEGOVINA
ECONOMY
1. Bosnia and Herzegovina’s (BiH) past
economic growth relied increasingly on
domestic demand as the key driver.
Private sector demand expansion was fuelled
by a credit boom financed from abroad. This
produced strong output growth amid a benign
external environment and ample bank financing.
However, the associated vulnerabilities became
clear in the 2009 crisis when capital inflows
came to a stop. Against this backdrop, the
currency board arrangement, fiscal tightening,
and financial support under the 2009 SBA
helped safeguard macroeconomic stability (Box
1). But this has not been enough to propel the
economy forward—staff projects that real GDP
will not regain its 2008 level until 2013. Structural
impediments continue to hamper economic
performance—the large government crowds out
the private sector and the business environment
discourages investment and business
expansion, leading to high unemployment and
low labor force participation.
2. The protracted political crisis slowed
reforms and progress toward EU
accession.
The long delay in the formation of a new
State-level government and the breakdown
in national policy coordination following the
October 2010 elections—evidenced by the
difficulty in reaching an agreement on the
budget for the Institutions of BiH and the
temporary interruption in the servicing of BiH’s
public debt to some IFIs in early-2012— stalled
economic reforms and progress toward EU
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