Download THE BULGARIAN STOCK MARKET – RECENT DEVELOPMENTS

BULGARIAN CAPITAL MARKET
AND THE ROLE OF
BULGARIAN STOCK
EXCHANGE
7th INTERBALKAN FORUM OF
BANKING ASSOCIATIONS
Sofia, May 4th
Ivan Takev, BSE-Sofia
Regulatory environment
• Harmonization with EU directives has been
completed
• Financial Supervision Commission guarantor
for market stability
• BSE Rules & Regulations in line with new
developments
• Corporate governance principles are widely
implemented
• New investment vehicles were introduced
(pension funds, insurance companies,
mutual funds, REIT’s)
Steady market growth
/2001-2007/
• Market capitalization of the BSE reached EUR 9 billion (35% of
GDP)
40.00%
35.00%
30.00%
25.00%
MCap/GDP
Turnover/GDP
20.00%
15.00%
10.00%
5.00%
0.00%
2000
2001
2002
2003
2004
2005
2006
(est.)
Steady market growth
/2001-2007/
• SOFIX increased by 1 300% in the last 5 years
1650
1450
1250
1050
850
650
450
250
08
-0
207
11
-0
906
14
-0
406
15
-1
105
17
-0
605
12
-0
105
09
-0
604
27
-1
003
25
-0
303
14
-0
802
10
-0
102
01
-0
601
17
-1
000
50
Steady market growth
/2001 – 2007/
• Average daily turnover doubled over the last two years
16.00
14.00
12.00
10.00
Volume (mil.)
8.00
Turnover (mil. BGN)
Trades (thou.)
6.00
4.00
2.00
0.00
y.2002
y.2003
y.2004
y.2005
y.2006
Listed Companies
Number of companies traded:
on the Official Market – 17 ;
on the Unofficial Market – 339
Market Cap-EUR 2,8 billion ;
Market Cap-EUR 7 billion
New listings in 2006 :
-Shares18
(REIT’s &Securitization of
Receivables)
-Shares-Public Comp. 11
-IPO
2
-Mutual Funds
19
-Bonds
28
Capital increases
48
New listings in 2007( April)
-Shares-SPV’s
6
-IPO
-Bonds
7
10
Capital increases
13
Investment oportunities
•
•
•
•
•
•
•
•
Capital increase through issue of shares
IPO’s
Bond issues
REIT’s - driving force is the boom in the real-estate
sector
Mutual funds – getting to be more and more
popular
Municipal bond issues – long-term investment,
decentralization accelerates this process
Venture capital and equity funds – preparing for the
big leap
Segment for small and mid-size companies – for
financing risky,
innovative projects
Corporate Governance
• A code In force since January 2007
• Incorporates the best practices and
standards, incl.OECD principles
• Mandatory for companies listed on the
Official Market
• A National Corporate Governance
Code will be adopted soon
But there are problems
to tackle…
• Market is still quite small
• Low free-float and low liquidity
• Limited number of IPO’s
• Limited offer of products
• Privatization is at its end – few
remaining potential candidates
• Lack of a derivatives market
Looking ahead
• BSE designed an action plan to attract
new listings, to enhance liquidity and
to introduce new services
• Implementing new technologies will be
the major task in 2007
• Launching of a derivatives market is
the next big step
• Finding a good partner remains our
strategic goal
Consolidation process
• Harmonized listing procedures
• One set of rules
• Common trading platform
• Cross-membership
• Single point of liquidity
• Efficient clearing & settlement process
The preferred model
would…
• Preserve the national identity and
specificity
• Abide to local regulations
• Introduce know-how and
technological innovations
• Contribute to the growth of the local
market
• Give direct access to foreign markets
Conclusion
• Regional co-operation is necessary
• Consolidation of the markets makes
them more visible and competitive
• MiFID will put an additional strain on
stock market operators
• ECN’s will compete with exchanges
• New challenges will call for new
strategies
Thank you for your attention