bse in a nutshell vr 100217

8/14/2019 BSE in a Nutshell VR 100217

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Exchange in a nutshell

Richard Vgh

17.02.2010


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About Budapest Stock Exchange

Trading at the Budapest Stock ExchangeHungary in the credit crisis

Topics

2 |


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Key facts about Hungary 1/2

Hungarian GDP 2001-2009*

Area: 93,036 kmPopulation (January 1, 2009):

10,030,97553

66

84

102110 113

138

155

125

20

40

60

80100

120

140

160

180

U S D b i l l i o n

4,10%

4,10%

4,20%

4,80%

4,00%

4,10%

1,10%0,61%

-6,50%

-0,50%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

2001 2002 2003 2004 2005 2006 2007 20082009*2010*

*ForecastSource: KSH, MNB

3 |

Main economic sectors

Oil and gasChemicalsPharmaceuticalsBanks

Information technologyMachineryTradeElectricity

Telecom

GDP growth 2001-2010* (HUF base)

0

2001 2002 2003 2004 2005 2006 2007 2008 2009*


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Key facts about Hungary 2/2Inflation (2001-2009)External trade* (2001-2008**)

-3 200-3 218

-4 686 -4 869

-3 607

-3 010

-163 -367

-5 000

-4 000

-3 000

-2 000

-1 000

02001 2002 2003 2004 2005 2006 2007 2008

U S D m

i l l i o n

9,19%

5,28%

4,67%

6,75%

3,57%3,92%

7,98%

6,06%

4,20%

3%

4%

5%

6%

7%

8%

9%

10%

*Commodity export Commodity import**No official data for 2009 has been published yetSource: MNB, KSH, GKI

4 |

Unemployment (2001-2009) Gross public debt / GDP (2001-2008**)-6 000 2001 2002 2003 2004 2005 2006 2007 2008 2009

5,70%

5,80%

5,90%

6,10%7,20%

7,50%7,40%

7,80%

9,80%

4%

5%

6%

7%

8%

9%

10%

11%

2001 2002 2003 2004 2005 2006 2007 2008 2009

52,08%

55,83% 58,06%59,42%

61,75%

65,56%65,81%

72,90%

50%

55%

60%

65%

70%

75%

2001 2002 2003 2004 2005 2006 2007 2008


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The transition to market economySize of the state sector (1990) Key historical events

Member of the Soviet block, oneparty system, centrally directed

economy, minor elements of themarket economy1989-1990: Peaceful introduction ofdemocracy and market economy

Privatesector15%

Statesector

Source: PV Zrt.5 |

Size of the state sector (2006)

Fledgling banking system,commercial banks just established(1987), legal framework for limitedliability companies (1989) and

personal income taxation (1987)2004: Admission to the EU

85%

Privatesector

80%

Statesector

20%


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Launch of a modern financialsystemKey events

1982 Public bond issues allowed by legislation1987 Two-tier banking system created

1988 OTC bond market created1988 Laws on companies, transformation and foreigninvestment passed, came to force in 1989

e aunc o e u apes oc xc ange :exchange flourising from 1864 was closed by the communists)1991 Law on investment funds passed1993 KELER Ltd. (the Hungarian CSD) was established

1998 Pension reform2001 Act on the Capital Market passed2005 Merger of the Budapest Stock Exchange and theBudapest Commodity Exchange

6 |


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The role of the Stock Exchange inHungaryThe Exchange in the economy

Multinational companiesLarge proportion of Top 100 companiesWill not be listed on BSE

Large Hungarian companiesMajority already listed

State owned large companiesOnly a few remaining listable state

Budapest StockExchange

Access to financialsources for both

7 |

owned companiesCompanies founded after the transformation

Mostly premature for listingCan serve as a basis for future listing

Developed banking system

Before crisis: easy access to creditPresent: dried up liquidity, recoveringbanking system

private and statesectorSource of liquidityHedging opportunityfor companies


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International trends Stock exchange groups in Europe

CEE Stock

NasdaqOMX

LondonStock

Nationalalliances

8 |

Group

NYSEEuronext

ExchangeGroup


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Market share of BSE in tradingHungarian equities (2009)

BUDAPEST

DEUTSCHEBOERSE

VIENNAOTHER

0.20%

67.27%0.16% 0.10%

Source: Reuters9 |

Markit BOAT

LSE Group

LIQUIDNET

1.76%

0.41%

30.10%


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The Budapest Stock Exchange within the CEEStock Exchange Group

10 |


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Member of the CEE StockExchange Group

Members of the CEE Stock Exchange Group The members of the CEE StockExchange Group are

ViennaBudapest

11 |

PragueThe Group is the largest player inCentral and Eastern Europe

Half of the total marketcapitalization in CEETwo-thirds of the total tradingvolume in equities in CEE176 trading members and235 listed equities


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1 794

882 831800

1 0001 2001 400

1 6001 8002 000

E U R b i l l i o n

Market capitalization of European

exchanges (31.10.2009)

445

86 77 31 20 90

200400

L o n d o n

S E

S p a n i s h

E x c

h a n g e s

D e u

t s c h e

B r s e

B o r s a

I t a l i a n a

W a r s a w

S E

W i e n e r B r s e

P r a g u e

S E

B S E

L j u b

l j a n a

S E

Source: FESE12 |


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Ownership structure of the

Budapest Stock Exchange

Shareholders of BSE Key facts about BSE

Member of the CEE StockExchange GroupMember of FESE, WFE andAFM

KBC

MNB6,95%

OTP Bank2,66%

Other10,05%

MOL2,18%

Source: BSE13 |

The only regulated market inHungaryFounding shareholder(46.67%) of Hungarian CSD

(KELER)

Wiener BrseAG

50,45%

Concorde4,17%

Securities

5,19%

sterreichischeKontrollbank AG

18,35%


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Mission of the Budapest StockExchange

Development of the domestic capital market by acquiring newissuers, introducing new products, widening the investor base,and providing competitive services to our clients.International integration as member of the CEE Stock

14 |

xc ange roup. s a s ng e poss y o ec n caconnection following consensus with domestic market players.Maintaining transparent, efficient and predictable operation incollaboration with market players and regulative authorities.


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BSE in figures

Equity market capitalization* EUR 21.1 billionNumber of tradingmembers in allSections

37

Capitalization/GDP* 22,65% Number of datavendors 32

Average daily equityturnover(01.01.2009-31.12.2009)**

EUR 75.6 million Exchange data end-users:(12.02.2010)

Professional7,221

Non-professional14,725Number of share issuers 47

*31.12.2009**Not duplicatedSource: BSE

15 |

Average daily equity market turnover**(2002-2009)

0

20

40

6080

100

120

140

160

2002 2003 2004 2005 2006 2007 2008 2009

E U R m i l

l i o n


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143% 139%

95% 91% 91%

76%80%

100%

120%

140%

160%

Share turnover velocity

(January 2010)

47%

4%0%

20%

40%

D e u

t s c h e

B r s e

B o r s a

I t a l i a n a

B S E

N a s

d a q

O M

X

( E u r o p e )

L o n d o n

S E

N Y S E E u r o n e x

t

( E u r o p e )

W i e n e r

B r s e

W a r s a w S

E

L j u b

l j a n a

S E

Source: WFE16 |


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Financial results

Breakdown of income (2008)

EUR million* 2008 2009

Net sales 12 12

O eratin costs 7 6

Listing feesData vending

Transmittedservices

20.20%

2.35%19.01%

*Calculated with year-end exchange ratesSource: BSE

17 |

EBITDA 6 6

Profit/loss after taxation 9 5

Trading fees58.44%


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Product portfolio

EquitiesSection

Debt SecuritiesSection

DerivativesSection

CommoditiesSection

Equities

InvestmentFund Shares

Public DebtSecurities

MortgageBonds

Futures

Options

Grain

Grain Futures

18 |

ETF

Structuredproducts

CompensationNote

CorporateBonds Grain Options

Gold Futures


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Number of listed instruments(2000-11.02.2010)

33

28 25 25

7579

90

101

82 79

150

200

250

300

350

Source: BSE19 |

63 58 49 52 47 45 42 41 43 47 4724 39 354 4 4 5 18 31

578939 38 36 34 34

30 329 14 29 41

0

50

100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010YTD

Corporate & mortgage bonds Government securitiesInvestment funds CertificatesEquities


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Issuers Equity market

Turnover of top 5 issuers(04.01.2010-29.01.2010)

Capitalization of top 5 issuers(11.02.2010)

MOL

ELMU

OTHER

32.30%

3.09%

11.28%

RICHTER

MTELEKOMEGIS OTHER

6.21%

4.91%1.19% 2.88%

Source: BSE20 |

OTP

RICHTER

MTELEKOM12.51%

13.09%

27.74%

OTP

MOL

62.97%

21.83%


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Trading members

Breakdown of equitymarket turnoverMultinational banks*: 7

Hungarian banks: 4

ForeignMembers

7%

HungarianBanks4,79%

Source: Reuters21 |

brokerage firms: 21Foreign members: 5

DomesticIndependentBrokerage

Firms51%

MultinationalBanks

37,36%

* Subsidiary or branch office


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BUX index

Total return index, taking accountof dividend payoutsFree float* market capitalisation-weighted indexNumber of shares in the index: 12

Breakdown by sectors

OIL AND GAS; 26,80%

CHEMICALS; 0,21%

MACHINERY; 0,47%

TRADE; 0,48%

RAMSZOLGLTATK;0,26%

TELECOM; 14,47% PRINTING; 0,33%

Disseminated in real-time every5 seconds

*Percentage of shares which are effectively available for trading

PHARMACEUTICALS;25,88%

BANKS; 31,10%


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CETOP20 index

Central European Blue Chip IndexFree float market capitalisation-weighted index20 most actively traded blue chipsof Central Europe

Breakdown by stock exchangesZAGREB3.60%

max mum s oc s rom onecountry)Calculated in EURDisseminated every day

WARSAW39.39%

23.76%

PRAGUE33.25%


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Index performance - EUR denominated(02.01.200829.01.2010)

60%

80%

100%

120%

Source: Reuters, MNB24 |

0%

20%

0 2 . 0

1 . 2 0 0 8

0 2 . 0

4 . 2 0 0 8

0 2 . 0

7 . 2 0 0 8

0 2 . 1

0 . 2 0 0 8

0 2 . 0

1 . 2 0 0 9

0 2 . 0

4 . 2 0 0 9

0 2 . 0

7 . 2 0 0 9

0 2 . 1

0 . 2 0 0 9

0 2 . 0

1 . 2 0 1 0

BUX (Hungary) CETOP20 (CEE) DJ STOXX 600 (Europe)


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113

88

6460

80

100

120

P / E

P/E ratios in the Pan-European area(11.02.2009)

3029 26 17

0

20

A T X

( A u s

t r i a )

S V S M

( S l o v e n i a )

W I G 2 0

( P o l a n d

)

F T S E 1 0 0

( U K )

P X

( C z e c h

R e p u

b l i c )

D A X

( G e r m a n y

)

C E T O P 2 0

( C E E

)

B U X

( H u n g a r y )

Source: Bloomberg25 |


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Trading at the Budapest Stock Exchange


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Structure of the Hungarian capitalmarket

Supervision (HFSA)

Inv

Inv

BSE SectionMembers

BSE SectionMembers

Banks

Banks

orders

Datavendors

orders

Information sales

27 |

esto

rs

estorsKELER KSZF Ltd.

CCP

BudapestSE Ltd.

houses

houses

Trading data

KELER Ltd.CSD


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Open outcry trading


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Electronic trading


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Trading system

Connectivity options

MMTS (Multi MarketTrading System)

I: spot marketII: derivative market

System settingsAvailability: 99.998%

Budapest Stock Exchang e Transaction Flow

TRADING ENGINETransaction Processing Level

GATEWAYQuery Processing Level

TransactionFlow

TransactionF low

TE T E

GW GW GW

30 |

2500 orders / secondNumber of registereddealers: 220Number of K2 members:17Fix protocol

TR ADER WORKPLACEPresentation Level

T W TW K2 TW T W K2

Connections viaHungarian T elecom

Connections via TNS


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The order book

bid info bid amount bid ask ask amount ask info

4 3 N 1 424 2 983 2 985 2 732 6 2 N

4 4 N 3 930 2 982 2 986 6 700 1 1 N

9 4 N 7 051 2 981 2 988 1 420 4 3 N12 4 N 19 289 2 980 2 989 2 901 3 2 N

5 3 N 5 270 2 979 2 990 12 523 10 6 N

2 2 N 3 000 2 978 2 994 2 000 1 1 N

5 4 N 5 450 2 977 2 995 4 692 13 6 N

4 3 N 9 145 2 976 2 997 3 379 2 2 N

1 1 8 N 5 573 2 975 2 998 1 800 3 2 N

3 3 N 625 2 974 2 999 17 658 6 5 N

5 3 N 6 350 2 973 3 000 45 194 48 13 N

5 2 N 3 783 2 972 3 002 288 1 1 N

10 5 N 8 612 2 971 3 003 160 2 2 N

39 9 N 20 263 2 970 3 005 1 200 2 2 N

1 1 N 15 2 969 3 006 1 000 1 1 N

2 2 N 300 2 968 3 008 2 100 3 2 N

1 1 N 100 2 967 3 009 600 1 1 N

5 4 N 1 250 2 966 3 010 13 670 13 6 N

17 6 N 2 942 2 965 3 012 1 251 1 1 N

1 1 N 40 2 964 3 014 1 950 2 2 N


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Hungary in the crisis


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Drops & increases(02.07.2007.-18.02.2010.)

DROPS Peak (value) Peak (date) Bottom (value) Bottom (date) Change(points) Change (%)

BUX (Hungary) 30 118 23.07.2007 9 461 12.03.2009 -20 657 -69%

CETOP20 (CEE) 3 518 29.10.2007 1 018 17.02.2009 -2 499 -71%

S&P 500 (USA) 1 565 09.10.2007 677 09.03.2009 -889 -57%

DJ STOXX 600 (Europe) 400 16.07.2007 158 09.03.2009 -242 -60%

ATX (Austria) 4 982 09.07.2007 1 412 09.03.2009 -3 570 -72%

WIG20 Poland 3 918 29.10.2007 1 328 17.02.2009 -2 590 -66%

Source: Reuters33 |

. . . .

RALLY Bottom (value) Bottom (date) 18.02.2010.(value) Change(points) Change (%)

BUX (Hungary) 9 461 2009.03.12 21 375 11 913 126%

CETOP20 (CEE) 1 018 2009.02.17 2 131 1 112 109%

S&P 500 (USA) 677 2009.03.09 1 100 424 63%

DJ STOXX 600 (Europe) 158 2009.03.09 249 91 58%

ATX (Austria) 1 412 2009.03.09 2 562 1 150 81%

WIG20 (Poland) 1 328 2009.02.17 2 251 923 70%


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Index performance, volatility and

correlation

0%

50%

100%

150%

200%

250%

300%

350%

400%

BUX

CETOP20

S&P 500

DJ STOXX 600

Index performance(05.01.2004 = 100%)

34 |

VOLATILITY 05.01.2004 - 30.06.2007 01.07.2007 - 28.02.2009 01.03.2009 - 16.02.2010BUX (Hungary) 21% 37% 33%CETOP20 (CEE) 19% 42% 34%S&P 500 (USA) 10% 35% 24%DJ STOXX 600 (Europe) 11% 31% 22%CORRELATION 05.01.2004 - 30.06.2007 01.07.2007 - 28.02.2009 01.03.2009 - 16.02.2010BUX - CETOP20 0,79 0,80 0,78BUX - S&P 500 0,10 0,44 0,37BUX - DJ STOXX 600 0,43 0,70 0,56CETOP20 - S&P 500 0,20 0,43 0,52CETOP20 - DJ STOXX 600 0,55 0,78 0,72S&P 500 - DJ STOXX 600 0,44 0,57 0,74


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Management of the financialcrisis in Hungary

Base rates (03.01.2005-30.11.2009)Steps taken by the Government and the CentralBank

New Tax Law: reduction of burdens of labor; riseof consumption taxes (VAT hike from 20% to25%)

13th month compensation in the public sectorscrappedPension hike planned for autumn is cancelledElimination of government subsidies

0%

2%

4%

6%

8%

10%

12%

14%

0 3 . 0

1 . 2 0 0 5

0 3 . 0

4 . 2 0 0 5

0 3 . 0

7 . 2 0 0 5

0 3 . 1

0 . 2 0 0 5

0 3 . 0

1 . 2 0 0 6

0 3 . 0

4 . 2 0 0 6

0 3 . 0

7 . 2 0 0 6

0 3 . 1

0 . 2 0 0 6

0 3 . 0

1 . 2 0 0 7

0 3 . 0

4 . 2 0 0 7

0 3 . 0

7 . 2 0 0 7

0 3 . 1

0 . 2 0 0 7

0 3 . 0

1 . 2 0 0 8

0 3 . 0

4 . 2 0 0 8

0 3 . 0

7 . 2 0 0 8

0 3 . 1

0 . 2 0 0 8

0 3 . 0

1 . 2 0 0 9

0 3 . 0

4 . 2 0 0 9

0 3 . 0

7 . 2 0 0 9

0 3 . 1

0 . 2 0 0 9

Source: MNB, European Central Bank35 |

Government bonds portfolio value offoreign investors (2005 Q1 2009 Q3)

budget deficit by HUF 1.300 bnGive aid to debtors and establish solidarity packDifficulties in issuing and auctioning governmentbonds from autumn 2008 onwardsThe IMF approved an EUR 11.7 bn credit forHungary in November, 2008

EUR 4.9 bn transferred on November 6th,2008EUR 2.3 bn transferred on March 30th, 2009EUR 1.4 bn transferred on June 23rd, 2009

Hungarian National Bank European Cent ral Bank

02468

1012141618

2 0 0 5 Q 1

2 0 0 5 Q 2

2 0 0 5 Q 3

2 0 0 5 Q 4

2 0 0 6 Q 1

2 0 0 6 Q 2

2 0 0 6 Q 3

2 0 0 6 Q 4

2 0 0 7 Q 1

2 0 0 7 Q 2

2 0 0 7 Q 3

2 0 0 7 Q 4

2 0 0 8 Q 1

2 0 0 8 Q 2

2 0 0 8 Q 3

2 0 0 8 Q 4

2 0 0 9 Q 1

2 0 0 9 Q 2

2 0 0 9 Q 3

U S D

b i l l i o n

HUF denominated Foreign currency denominated


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Investor structureBreakdown of equity marketcapitalization by investor groups(2009 Q3)

Securities turnover by investorgroups(01.01.2009-30.04.2009.)

HouseholdsForeign

Proprietary12,41%

Financial

Non-financialcompanies

9,31%

Households5,69%

State4,00%

Source: MNB, Investment service providers36 |

Increase in number of securities accounts:22% from April 2008 to April 2009

,

Institutions14,86%

,

Foreign73,83%

7,58%


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Monthly market turnover (numberof trades)

300 000

350 000

400 000

450 000

500 000

r a d e s

Derivatives market

Debt securities market

Equity market

37 | Source: BSE

0

50 000

100 000

150 000

200 000

250 000

N u m

b e r o

f


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For further information please visit ourwebsite:

www.bse.huwww.ceeseg.com

38 |

Budapest Stock Exchange Ltd.

bse in a nutshell vr 100217

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