The Sarajevo SE News Buletin

Monday, 22 January 2007

The Sarajevo Stock Exchange News Bulletin

Successful trading results

In its fifth year of operation the Sarajevo Stock Exchange (SASE) has accomplished excellent results in share trading. There are several examples that could confirm this, but the most illustrative one is the total turnover in 2006 with the amount of 654 million Convertible marks (approx. 334 million Euros). When compared with last year s turnover (555 million Convertible marks approx. 284 million Euros) this was an increase of almost 18%. This increase in turnover was specially noted in the second half of 2006 where in the month of July single biggest transaction was reported to SASE as a block transaction with shares of Kakanj Cement Factory in the amount of 75 million Convertible marks (approx. 38 million Euros). This trend of increased turnover was continued throughout the second half of the year and in the last three month of 2006 SASE monthly turnovers were of almost 100 million Convertible marks (approx. 51 million Euros).


Attracting investors


In the analysis of increased turnover in 2006 on SASE we have to mention that all capital market institution did its maximum effort in elimination of obstacles for investors. In the first four months we have analyzed investor s obstacles and started removing them. Above all we wanted to adequately show investors that our capital market is worthy for them and offers substation returns on their investments.

The access to the greater number of information was enabled with new data available on redesigned SASE web portal together with list of top ten share holders for all securities available on Central Register s web portal. In 2006 another significant milestone was achieved with listings of the first three companies on the SASE Official Market. The first on the Official Market was company Bosnalijek (Bosnian Pharmaceutical) listed in October followed by companies Klas and Sarajevo osiguranje (Food Production Company and Insurance Company). These companies were first to understand advantages of this market segment and advantages toward their investors, clients and other interest groups. Openness to investors draws their attention and gives incite and confidence to the capital market in the Federation of Bosnia and Herzegovina.

Past year will also be remembered by the first custody transaction done in October. This means banks can now trade for their clients without identifying them, which is very important for some of them and will attract them in greater numbers.

One more reason for greater investor s interest in capital market in the Federation of Bosnia and Herzegovina is the announcement for infrastructure projects especially in energy, telecommunication and road construction sectors. These announcements had already impacted the prices of companies in these sectors.

Also government made announcement for privatization of companies who are pillars of Bosnian economy (Eneroinvest, Hidrogradnja).

The First International Conference organized by SASE in October made a big impact on the market and attracted new investors from the region, but also from the world.


New products


In 2006 the government of the Federation of Bosnia and Herzegovina has announced that will start the sale of the state owned capital in companies over the stock exchange. They have already decided the first company to be sold will be Interaped and they already elected brokerage house that will assist them in this matter.

Unfortunately, expected issuance of the government bond was not done in this year, but the hope still remains that it will be done in 2007.


Plans for 2007

Our trading turnover projection for 2007 is in the framework of accomplished results in 2006. We expect that 2007 will not bring greater increase in turnover when compared with 2006, and we are projecting 660 million Convertible marks (338 million Euros). In these careful estimates we had to consider decrease in projected number of block trades for 2007 due to new stricter reporting regulation. In 2006 block trades represented 30% of annual turnover.

On the other hand SASE plans to introduce new trading stimulants.

In 2007 we are introducing Friday as a fifth trading day. We have purchased source code for our new trading software and now we will be able to offer new software solutions for our members. Also SASE is trying to decrease transaction costs for investors and in 2007 is lowering stock exchange commission to 0.08% of transaction value.

We are currently working on intraday trading project which will enable same day purchase and sale of any shares. The start of intraday trading is expected for early 2007. Parallel to this we are working on electronic order book which will be of crucial importance for intraday trading. All these plans for more efficient trading on our stock exchange in 2007 give a clear signal to investors that capital market institutions are working on more open and flexible market in Bosnia and Herzegovina.

We are expecting bond trading to start in 2007 first with government bonds. The government has announced them for April of 2007, but more realistic forecast would be for late 2007.

The capital market in the Federation of Bosnia and Herzegovina will host some new domestic open investment funds which will contribute to further growth of our market.

Cooperation with stock exchanges in the region will continue in 2007. SASE has made arrangements with the Vienna Stock Exchange for the live data feed and data dissemination to the wide range of providers. Also SASE is continuously working with the Vienna Stock Exchange on creation of single Bosnian index. SASE together with the Banja Luka Stock Exchange will receive technical assistance from the Vienna Stock Exchange in this matter.

Furthermore we are planning joint presentations to investors. This cooperation with the Vienna Stock Exchange and other stock exchanges in the region would promote our region on the global market. This way investors would be able to choose what they like the most, and we hope they will choose the Sarajevo Stock Exchange.