FEDERATION OF EURO-ASIAN STOCK EXCHANGES
SEMI ANNUAL REPORT OCTOBER 2006
BANJA LUKA STOCK EXCHANGE
Milan Bozic
CEO
2004 was a year of significant improvement in
the Banja Luka Stock Exchange (BLSE) market
performance. BLSE obtained an important role
in the transitional processes in Bosnia and
Herzegovina. The most important results are
related to an increase in turnover, which
amounted to US$ 65.3 million, showing an
increase of 50% in comparison with 2003.
During 86 trading days in 2004 there were over
80,000 transactions concluded, which is 300%
more than in 2003. Significant progress was
also made in regard to the structure of
turnover. More than 45% of total turnover was
achieved on the official market, which is a
consequence of admitting to this market
segment 3 companies and 13 Privatization
Investment Funds (PIFs). Total market
capitalization also increased from US$ 522.7
million on December 31, 2003 to US$ 1.3
billion on December 31, 2004. More than 60%
of the above mentioned amount is related to
the official market.
HISTORY AND DEVELOPMENT
15.07.1998 The adoption of the Law on
Securities provided the necessary legal
framework to establish the capital market of the
Republic of Srpska.
04.05.2000 The National Assembly of the
Republic of Srpska appointed the first members
of Republic of Srpska Securities Commission.
26.02.2001 Established Central Registry of
Securities.
09.05.2001 Eight banks and one company
trading in securities signed the Contract that
established the BLSE.
09.08.2001 Republic of Srpska Securities
Commission issued working permit to the BLSE.
29.11.2001 The first equity from the privatization
program was registered in the Central Registry
of Securities (CRHOV).
05.03.2002 Signed contract on transfer of
license between the Directorate for Privatization
and the BLSE that provided BLSE with electronic
trading system (BTS) developed by the Ljubljana
Stock Exchange (LJSE).
14.03.2002 The first BLSE trading session took
place, involving six members that traded 20
listed securities.
12.11.2002 The BLSE purchased 7% of stocks
of the Central Registry of Securities.
12.09.2002 The law on takeover came into
force.
30.09.2002 The BLSE and the LJSE signed
memorandum on cooperation and exchange of
information.
10.12.2002 A contract on regional cooperation
in field of education and financial markets was
signed at the Belgrade Stock Exchange.
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As a result of improvement of the financial
disclosure, the participations of foreign
institutional investors have significantly
increased, which indicates the
internationalization of the BLSE market.
During 2004, two BLSE indices were created.
The Stock Exchange Index of The Republic of
Srpska (BIRS), which includes 10 companies
with the largest market capitalization, indicated
an increase of 15% for an 8 month period.
Total return on BIRS for this period was over
20%. The Privatization Investment Funds Index
(FIRS) includes 13 shares of Privatization
Investment Funds (PIFs). FIRS increased from
September 1st to December 31, 2004 by 85%.
Positive growth indicates increasing investor’s
interest and confidence in the BLSE, which is
largely due to the BLSE’s promotional and
educational activities.
As a result of improvement of the financial
disclosure requirements (Financial statements
for PIFs are disclosed on a monthly basis), the
participation of foreign institutional investors
has significantly increased, which indicates the
internationalization of BLSE market. We are
24.01.2003 The first session of the Listing
Commission took place and stocks of 13
Privatization Investment Funds admitted to the
official market of the BLSE.
11.02.2003 The first transactions concluded
with shares of PIFs.
24.04.2003 Shares of Telekom Srpske a.d.
Banja Luka and Banjaluka pivara a.d. Banja
Luka were listed on the free market of the BLSE.
30.04.2003 Bobar Bank a.d. Bijeljina became
10th member of BLSE.
20.08.2003 The first auction for state owned
capital took a place on the BLSE.
23.09.2003 Shares of Rafinerija ulja a.d.
Modrica were listed on the official market of
BLSE as the first company listed on official
market in BiH.
30.10.2003 The BLSE presented Internet portal
www.sem-on.net (project of exchange of
information between seven Exchanges from the
region).
01.06.2004 The BLSE established BIRS,
consisted of 9 companies and 2 banks.
07.06.2004 First bond in BiH (Slateks Slatina)
listed on the market of the BLSE.
01.08.2004 The FIRS was introduced.
FIRS included shares of 13 PIFs from Republic
of Srpska.
17.09.2004 On the 10th General Meeting of the
FEAS held in Novigrad, Croatia, the BLSE was
accepted in full membership of FEAS.
30.05.2005 Shareholders Assembly of the Stock
Exchange appointed new Managing and new
Supervisory Board.
03.10.2005 Continuous Trading Method
introduced for shares listed on the official
market of the BLSE.
especially proud of the increasing number of
small local investors, which indicates the
success of the BLSE in educational activities.
This has not been an easy task, bearing in
mind that almost all citizens had a reason not
to believe in new things such as investing in
capital markets, because of the frozen saving
accounts issue.
An important result during 2004 was
participation in the privatization of more than
60 state owned companies. Finally, the BLSE
became a full member of FEAS in November
2004.
Note: Please note that there is a difference
between BLSE reported numbers in the
message from the CEO and the FEAS statistics
based on auction for state owned capital and
block transactions reported to BLSE which are
not included in the FEAS statistics.
16.11.2005 Third regular revision of both
indexes was made and structure of the indexes
did not changed
28.12.2005 Listing of Elektroprenos Banja Luka
shares on the Free Market–the end of process
of listing shares from the Power Utility System of
the Republic of Srpska.
29.12.2005 On the Banja Luka Stock Exchange
recorded a new highest value on the amount of
BAM at 60,532,673.
20.03.2006 Introduction of continous trading in
shares from the Free Market which fulfill the
liqidity criteria
17.05.2006 First International Conference of the
Banja Luka Stock Exchange was held.
FUTURE OUTLOOK
In 2006 the BLSE plans to:
• initialize creation of national corporate
governance standards;
• introduce new market instruments such as
long term governments bonds issued on the
basis of the frozen savings;
• install a new web information portal, which will
enable investors to access a large scope of
data, such as the macroeconomic situation in
Bosnia and Herzegovina, trading information,
financial statements and ownership structure of
the listed;
• encourage listing of successful local
companies on the official market;
• continue with educational and promotional
activities; and
• further develop methods of continuous
trading with listed securities.