FEAS Yearbook FEAS Yearbook 2009 | Page 142

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT APRIL 2009 ZAGREB STOCK EXCHANGE Roberto Motusic General Manager Despite the global market volatility and recessionary environment forecast the Zagreb Stock Exchange (ZSE) will continue its work on implementation of a new products and services. Year 2009 will test the capabilities of market and stock exchange 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 47 shareholders and 42 members. Prerequisites for ZSE membership include: compliance with the Securities Law, licensing with CROSEC and acceptance of the ZSE rules. A seat on the ZSE currently costs approximately US$ 73,000. Members are required to comply with the rules and regulations of the ZSE and must register at least one licensed broker. Year 2008 was the most eventful year for the Croatian capital market. The year that started on the bull note has lost their entire lustrous gain that they gained in 2007 .This was sparked by the subprime crisis and their ripple effects, bad economic news started from the USA and spread throughout the Europe and the effect was so cascading that they ruined the sentiments in Emerging capital markets globally and index of PAGE 140 Despite the global market volatility and recessionary environment forecast the Zagreb Stock Exchange (ZSE) will continue its work on implementation of a new products and services. flexibility. Narrowing the targets and carefully selecting priorities to stabilize the system, and regain the investors’ confidence are the primary tasks. Croatian Capital Market crashed more than 67%. Any positive development, long term growth story, fundamental storey everything blown by bears that came in hurry. Strong final-month rally (CROBEX +7.2%) helped partially reverse losses incurred through the year. Turnover decrease 26% (yoy basis), but number of transactions almost doubled. Final result is 17 billion kunas equity turnover, 5 billion less than in 2007 but significantly more than in year 2006. We anticipate further government action as well as the use of other tools to stimulate growth. Business sentiment continues to fall very sharply to multi-year if not multi-decade lows on both sides of the Atlantic and will roll over to emerging markets as well. Equity market valuations acknowledge this recessionary environment. The consensus view of market participants is that stocks are cheap, but it is possible equity valuations could re-test lows given the pending weakness in future corporate earnings. FUTURE OUTLOOK The sustained nature of the financial sector distress all around the globe and emerging macro data points to a more prolonged economic downturn than previously envisaged. Although it’s not directly in line with the current state of Croatian economy and companies financial results, global investors fear could affect domestic capital market, liquidity and stock prices. There is on going stock exchanges consolidation within the region (Vienna and Warsaw SE trying to position themselves as East-European leaders in SE mergers and acquisitions. Some smaller exchanges are looking for close cooperation including ownership relations with larger players). The ZSE will carefully observe what’s on the market and follow these trends.