ZAGREB STOCK EXCHANGE
Marinko Papuga
General Manager
In January 2004 we will
enforce new Exchange
rules that we believe will
be integral to improving
market integrity and
strength.
This past year was an extremely successful
year for the Zagreb Stock Exchange (ZSE).
Trading in equities rose 55% and, due to
outstanding volumes in bonds, total turnover
doubled compared to 2002. Based on these
figures and a huge number of new listings (114
new companies), we strongly believe there will
be sustained increases in the future as well as
the ongoing development of the capital market.
Overall trading volume in bonds issued in the
domestic market exceeded HRK 10.7 billion
(US$ 1.6 billion) by the end of last year, making
it double the trading volume registered on the
ZSE during 2002. We expect that in the 2004
bond market segment, particularly the less
developed corporate bonds, will continue to
expand and grow.
Market capitalization of companies with regular
turnover on the ZSE totals HRK 37 billion (US$
6.1 billion), 20% of the GDP projected 2004. To
these figures is added market capitalization in
bonds that at the end of 2003 was HRK 21
billion (US$ 3.4 billion). This puts Croatia, by its
market capitalization share in the GDP, one
step ahead of other Central and East European
countries. Market capitalization rose 31.1% in
2003 mainly due to the number of new listings
in the less stringent JDD quotation.
HISTORY AND DEVELOPMENT
The ZSE was incorporated in 1991 as a joint-
stock company with 25 commercial banks and
insurance companies. Today, the ZSE has 45
shareholders and 39 members. Prerequisites
for ZSE membership include: compliance with
the Securities Law, licensing with CROSEC and
acceptance of ZSE rules. A seat on the ZSE
currently costs approximately US$ 13,000.
Members are required to comply with the rules
and regulations of the ZSE and must register at
least one licensed broker.
In 2003 there were many new developments on
the Zagreb Stock Exchange.
• The Securities Act set up the criteria, as well
as the requirement, for large public companies
to be listed on the Exchange in a separate
“JDD” quotation. As a result 114 companies
and 130 shares were additionally listed. More
important is the fact that now, we have the
leading Croatian companies reporting all major
market changes, corporate news and, on a
regular basis, submitting and disclosing interim
and annual audited financial statements.
In January 2004 we will enforce new Exchange
rules that we believe will be integral to
improving market integrity and strength. This
will help issuers, financial intermediaries and
investors to get first class quality financial
services in Croatia and consequently make
fine-tuning easier in line with EU rules and
directives. All of this should contribute toward
upgrading the appeal of Croatia’s investment
potential.
FUTURE OUTLOOK
• The new high-tech interactive information
service, “MOSTich Master” (also used as a new
institutional investor tool), was introduced in the
summer of 2003 and gives real time price
dissemination via the internet. With this
information channel protected by smart card
and digital signature, investors have indirect
access to trading systems and can report all
institutional transactions without intermediaries
and in real time.
• The first foreign issue was listed on the ZSE:
Bina-Istra dd listed its 8% EUR 210,000,000
secured bond issue due in 2022.
Simultaneously, the issue was listed on the
Luxembourg Stock Exchange. Although the
issuer was incorporated in the Republic of
Croatia as a special purpose joint-stock
company whose principal purpose is to
develop, finance, construct, operate and
maintain a road project in the Republic, its
bonds have been issued abroad. The governing
law for the bonds is English law, and the issue
is treated as a foreign issue in the Republic of
Croatia.
• In 2003 all government bond issues were
listed on the ZSE, thus creating a nucleus of
what could become a central government debt
market.
FEDERATION OF EURO-ASIAN STOCK EXCHANGES YEARBOOK 2003/2004
PAGE 94
The year 2004 will, politically speaking, be a
very important one for the ZSE because the
European Commission is scheduled to decide
on Croatia’s bid for full EU membership,
which would allow the country to join the
second wave of enlargement in 2007-2008.
This decision is important in many ways, but
economically, it would bring to Croatia a
better credit rating and easier access to
foreign capital, as well as give the country a
clearer view of its goal by complying with the
EU directives and standards.
There are signs that the newly elected
government will take an active role in
additional market reforms and further
privatization of state-owned enterprises.
There are some expectations that a higher
level of disclosure associated with the new
listings could attract more investments and
trading in the previously “less visible”
companies and shares.