Post on 16-Jan-2016
1Budapest Stock Exchange
Reinventing capital marketsin Hungary
The strategy of the Budapest Stock Exchange
International roadshow, June 17, 2002
György Jaksity
Member of the Board of the BSE Ltd.
2Budapest Stock Exchange
Key points
The growth and development of the Hungarian capital market has reversed in the last 2-4 years
The BSE has adapted to the new situation but was unsuccessful in govt. lobby
There is an opportunity that the new government and financial intermediaries work together to develop capital markets in Hungary
The new Board aims to increase domestic capital market investments, new listings and integrate the BSE with European stock exchanges
3Budapest Stock Exchange
Why has the growth of BSE stopped?
Overly biased development of the banking sector at the expense of capital markets and long term savings in the last ten years
Former government’s unfriendly attitude to markets and issuers, halting of pension reform
Slow and inappropriate enaction of modern financial regulation and supervision
Continuous financial market crises (Far East, Russia, Brazil, Argentina, Nasdaq etc.)
4Budapest Stock Exchange
Capitalisation and turnover of BSE
0
500
1 000
1 500
2 000
2 500
3 000
1995 1996 1997 1998 1999 2000 2001 2002
US
D m
illi
on
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
US
D m
illi
on
Monthly equity turnover (left scale) Equity capitalisation (right scale)
5Budapest Stock Exchange
Performance of BUX and MSCI emerging market indices
0%
20%
40%
60%
80%
100%
120%
140%0
5.9
7
08
.97
11.9
7
02
.98
05
.98
08
.98
11.9
8
02
.99
05
.99
08
.99
11.9
9
02
.00
05
.00
08
.00
11.0
0
02
.01
05
.01
08
.01
11.0
1
02
.02
EM Global EM Eastern Eu BUX
6Budapest Stock Exchange
The BSE’s reaction Reshuffling of management
Cost cutting and rationalisation stabilised the financial situation
Generating more revenues from information vending, transaction and issuers’ fees did not compensate for a 60% fall in trading in 2001
Easier facilitation of listing and marketing, still no new listings
New products resulted in marginal activity
Continuous lobby and support of the legislative process
International co-operation and preliminary talks about the European integration progressing well
7Budapest Stock Exchange
The tasks of the new BoardThe BSE was converted into a limited liability company and a new
Board was elected in April 2002 Campaign aimed at domestic investors to enhance long term savings
and investing in capital market instruments
Co-operate with new government in helping capital markets develop further in Hungary and continue support to improving financial regulation
Strengthen the integrity of the BSE and KELER
Integrate the BSE (co-ordinated with KELER) into the framework of European stock markets
Continue with active marketing and investor relations on an international level together with all market participants (eg road-shows)
8Budapest Stock Exchange
Hungarian savings structure
380 1 406 40 150 120 85
425 1 766 78 218 135 134
554 2 193 206 408 283 211
657 2 614 268 571 302 341
828 2 927 365 730 240 551
875 3 271 463 819 273 818
979 3 767 573 877 177 1 076
0% 20% 40% 60% 80% 100%
1995
1996
1997
1998
1999
2000
2001
Cash Deposit investment fund
Government sec. Listed shares Insurance/pension f.
Source: NBH statistics
9Budapest Stock Exchange
Domestic campaign and marketing
First of all unite the efforts of ALL financial intermediaries to achieve a common goal
Increase people’s awareness for self care and need to save for long term, and invest in private plans
Convince savers about the need for higher risk and higher real return instruments such as equities and mutual funds
Inform households about how financial institutions can help them optimise on financial planning
Promote long term saving and investment instruments and services
10Budapest Stock Exchange
Working with the new government
Continuing support to the development of the Hungarian financial regulation
Help the new government enact steps to improve The attractiveness of capital markets for investors and issuers Motivation of local institutions to be more active in the equity
market Taxation for capital market participants The profile and efficiency of the Hungarian financial industry and
markets The international image of the Hungarian economy and markets
11Budapest Stock Exchange
Increase integrity with KELER
The Hungarian market has a modern trading, settlement and clearing system which operates with a clean history
There are opportunities for joining forces in technology, administration, joint product development and seeking of synergies
European integration requires harmonised strategies, development and operation
The shareholder structure of both firms may change in the future, but should support the above goals
12Budapest Stock Exchange
International and EU integration
Our aim is to increase both inward and outward business through the BSE, and improve services provided to our clients
The BSE has actively sought strengthening relations with stock exchanges in the region and Europe.
We have investigated ways to co-operate with alternative markets and technological platforms
We have held discussions with representatives of most European exchanges and alliances
We are looking at all alternatives jointly with KELER
We can conclude our first agreement within a year
13Budapest Stock Exchange
The network of European markets
London
NASDAQ
NOREX
Stokcholm, Koppen-hagen, Oslo, Izland
Amsterdam
Brussels
Paris
Frankfurt
HelsinkiBaltics
Ireland
EuroNext
Portugal
Italy
Vienna
NEWEX
Warsaw
Budapest
Prague
Ljubljana
Bratislava
Madrid
XETRA
Virt-X
Tradepoint
SWX
New York, Toronto, Mexico, Tokyo,
Australia, Hong Kong
EASDAQ
EUREX
DB, HEX, SWX
GLOBEX: MATIF, CME,
Montreal
GEM
?
?
iX
Neuer Markt
Jiway
Luxemburg?
LIFFE