FEAS Yearbook FEAS Yearbook 2013 | Page 91

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013 ZAGREB STOCK EXCHANGE The primary task of Zagreb Stock Exchange is to become the market of choice in the region. Ivana Gazic President of the Management Board Zagreb Stock Exchange faces new challenges in the still uncertain economic environment. Encouraged by signs of a fragile recovery and with strong fundamentals it will continue to act as an efficient and rule-based market harmonized with the European standards and remain confident in the progress of the Croatian capital market. This confidence is even stronger since after long negotiation process that HISTORY AND DEVELOPMENT The stock exchange trading in Croatia was active since 1907 till 1911 and again since 1919 till 1945. After the World War II the Zagreb Stock Exchange was revived in 1991 as a joint- stock company with 25 commercial banks and insurance companies. From the initial 25 members (brokerage companies), thanks to the trade growth and development the number of members has climbed to some forty-odd active traders today: banks and private brokerage companies, and 43 shareholders. At the very beginning, trading took place at big auctions held at the Exchange head office with all brokers actually physically present and in 1994, an electronic trading system was introduced. In 2007, the Croatian financial market consolidated as the Varazdin Stock Exchange merged with the Zagreb Stock Exchange. These new circumstances, resulting in a larger number of listed securities and greater trading volume, along with a natural development of the financial market that saw the investment climate improve and gave rise to a stronger interest of all market participants in new financial products, highlighted the need for the implementation of a new system that would be able to meet the needs of the small, but extremely fast-growing Croatian market. The new trading platform, launched in autumn 2007 after several months of preparations, represents an unprecedented technological enhancement. commenced in 2005, Croatia is now scheduled to become the 28th European Union Member State in July 2013. quality of capital market services in order to meet the needs of investors, issuers and all stakeholders. The primary tasks of Zagreb Stock Exchange will be to lead the development of the capital market in the region while providing transparent, secure, cost-effective and efficient marketplace as well as to obtain the highest Zagreb Stock Exchange will carefully observe global as well as regional economy and equity market trends and remain in line with market expectations in order to become the market of choice in the region. ZAGREB STOCK EXCHANGE IN 2012 However, 2012 will be remembered most for the launch of structured securities: for the first time since the Exchange was founded, this enabled trading in a new type of instrument - the first securities to be admitted to the International MTF, while also introducing the first foreign issuer to the Zagreb Stock Exchange. In addition to expanding the range of investment products in the local market, it also paved the way for investing in an asset class which might otherwise be very difficult or impossible to access. As it is, a total of 16 certificates, with gold, crude oil, German Bunds and the DAX index as the underlying instruments, were available for trading on the Zagreb Stock Exchange by the end of the year. Investor interest was strong so between mid-September - when certificates trading began - and the end of the year, turnover in structured securities reached almost EUR 7 million. If 2012 in the local capital market were to be interpreted on the basis of statistical trading data alone, it might prove difficult to find a bright side to the report: regular share turnover was practically halved while more than a -35% decline in the total turnover was attenuated to some extent only by growth in the regular bond turnover in excess of +107%. Stock indices CROBEX and CROBEX10 ended at virtually the same level as the year before, which is good news actually, especially taking into account a two-digit correction in the course of 2012. Fortunately, statistical data are not the only measure of market dynamics - figures aside, there were a number of developments which might lead to positive results in some future reports. Year 2012 on the Zagreb Stock Exchange was marked by several important anniversaries: 20 years since the first ever transaction - concluded on 30 March 1992, and the CROBEX index celebrated 15 years since its launch, which was highly significant for raising the visibility of the local capital market, particularly in the years crucial for strengthening shareholder culture and spurring the interest of foreign investors on the Zagreb Stock Exchange and in the Croatian capital market in general. For three years now, the educational needs of the financial market have been served by the ZSE Academy, which provided seminars, lectures and training programmes to more than 1,000 participants in 2012 alone while educating more than 2,000 participants since it was established. FUTURE OUTLOOK Croatia should be a member of the EU from 1 July 2013 as the 28th country to join the Union. Full European Union membership is expected to accelerate fiscal and structural reforms and should make Croatia more attractive for foreign investors. However, structural reforms lag and the concern still remains while Croatia is yet to see the signs of a sustained economic recovery. Further government actions will be essential to induce the recovery of the domestic capital market, especially regarding further privatization of public enterprises. PAGE 89