bulgarian capital markets at a glance - bse-sofiadownload.bse-sofia.bg/presentation/1.3. bulgarian...

Bulgarian Capital Markets at a Glance

Ivan Takev, CEO, BSE

London, May 18th 2017

Disclaimer

The materials, contents, and references may not be used for and shall not be deemed to be apublic offering of securities in the United Kingdom. These materials do not constitute anoffer of Instruments to the public in the United Kingdom.

These documents do not constitute advertisement, neither a prospectus for the purposes ofDirective 2003/71/EC. Investors should not subscribe for any securities referred to in thesedocuments.

This presentation is set forth for informational purposes only. By attending all viewersacknowledge that (i) the presentation of this material neither constitutes an offer to sell nora solicitation of an offer to buy the financial instruments described, (ii) no recommendation ismade concerning the financial instruments described and (iii) it may be unlawful to offer tosell or to solicit an offer to buy the described financial instruments in certain jurisdictions.

The opinions expressed represent personal opinion of the author only.

The author may possess investments in some of the financial instruments analyzed andcommented.

2

2000

20042005

2008Bulgarian Stock

Exchange

Bulgarian Central

Depository

SEC License

SOFIX

First IPO

BG 40

2010

‘BSO’

2011

New Market Segmentation

2012

CGIX

1995

19961997

2013

2016

Premium Market

‘BGX’

Milestones

3

Infrastructure overview

XETRA®

Market

Commonly adopted trading model

Robust functionalities

Large capacityHigh-

speed operation

Easy remote access

MiFID II ready

4

Macro Highlights2013 2014 2015 2016

GDP (EUR million) 41 911 42 750 44 162 47 364

Real GDP growth 1.30% 1.60% 3.00% 3.40%

Short-term interest rates 1.14% 0.79% 0.54% 0.15%

BGN/EUR exchange rate* 1.95583 1.95583 1.95583 1.95583

Population 7 265 115 7 223 937 7 265 115 n.d.

GDP per capita (nominal, EUR) 5 765 5 911 6 136 6 645

Market Cap (EUR million) 5 093 4 988 4 390 4 951

Market Cap/GDP 12.15% 11.67% 9.94% 10.54%

Source: BNB* Pegged to DEM (hence to EUR) since 1999

5

Macro Highlights

Source: BNB* Pegged to DEM (hence to EUR) since 1999

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

5

10

15

20

25

30

35

40

45

50

EU

R (b

illio

n)

Market Cap/GDP

Mcap GDP Mcap/GDP6

Market Highlights (1)2013 2014 2015 2016

Trading value (EUR million) 792 388 210 213

Capital raised (EUR million) 58.60 15.62 16.53 23.33

Companies raised capital 11 5 5 7

Average capital raised per company (EUR million)

5.33 3.12 3.31 3.33

IPOs 1 1 1 2

0

2

4

6

8

10

12

14

16

18

20

22

200

250

300

350

400

450

500

550

600

650

700

SOFIX performanceJan 2010-May 2017

SOFIX value P/E P/B

0

4

8

12

16

20

24

390

440

490

540

590

640

690SOFIX performance

Last 365 days

SOFIX value P/E P/B 7

Market Highlights (2)

0

500

1 000

1 500

2 000

2 500

0

3

6

9

12

15

USD

(b

illio

n)

FDI vs. SOFIX performance

FDI SOFIX

Source: The World Bank, BSE 8


Source: The World Bank, BSE

0%

5%

10%

15%

20%

25%

30%Turnover Velocity (Main Market vs. SOFIX constituents)

BSE Turnover Velocity SOFIX Turnover Velocity

9


10

0

50

100

150

200

250

300

350

0

2

4

6

8

10

12

14

16

Avg

Mo

nth

ly T

rad

ed V

alu

e (E

UR

Mill

ion

)

Mar

ket

Cap

(EU

R b

illio

n)

Main Market Cap (eqities only) and Monthly Traded Value

Average Monthly Traded Value Market Cap


11

0

20

40

60

80

100

120

140

160

EU

R (m

illio

n)

Monthly Traded Value vs. 12-month Median Monthly Traded Value

Monthly Traded Value

12-month median Monthly Ttraded Value


Source: BSE

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

Potential median spread after two-sided execution of EUR 10,000

Sopharma Advance Terrafund Chimimport

12


Asset Management Companies 31

Net Assets Under Managements (AuM) of mutual funds (EUR million) 532

Net Assets Under Managements (AuM) of pension funds (EUR million) 5 552

Market Cap held by institutional investors (EUR million)996

Share ownership by institutional investors 17.86%

Share ownership in SOFIX Companies by institutional investors 6.11%

Share ownership in BGBX40 Companies by institutional investors 9.00%

Institutional investors include investment funds, UCITs, Pension insurance companieshttp://www.fsc.bg/, http://baud.bg

13


0

100

200

300

400

500

600

90

95

100

105

110

115

12-2010 12-2011 12-2012 12-2013 12-2014 12-2015 12-2016

EU

R (m

illio

n)Investment Funds AuM

Bulgarian Investment funds total assets under management (EUR)

Total number of investment funds 14

Corporate Governance

2011

2012First corporate governance code

National Corporate Governance Committee

National Corporate Governance Code

CGIX

Parallel Englishdisclosure

20062007

2009

15

Corporate Governance (2)

16

-

500

1 000

1 500

2 000

2 500

2011 2012 2013 2014 2015 2016

EU

R (m

illio

n)

Total operating income /SOFIX and CGIX constituents/

CGIX Constituents SOFIX Constituents

Why invest in Bulgaria

0.93%

4.06%

1.49%1.40%

1.87% 1.84%

1.18%

3.96%

3.04%

2.01%

1.50%

2.25%

5.97%

5.58%

4.93%

3.54%

2.31%

1.15%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

2011 2012 2013 2014 2015 2016

Dividend yield and interest rates comparison

average dividend yield all listed companies average dividend yield SOFIX average interest rate on 6 m to 1y deposits 17


• 0% tax on capital gains;

• 5% dividend withholding tax;

• 10% flat corporate & personal income tax

0%

10%

20%

30%

40%

50%

Bulgaria Romania Poland Austria Germany UK

Natural Person Capital Gains Taxation

0%

10%

20%

30%

40%

50%


Natural Person Dividends Taxation

0%

10%

20%

30%


Legal Person Capital Gains Taxation

0%

5%

10%

15%

20%

25%

30%


Corporate Income Taxation

0%

5%

10%

15%

20%

25%

30%


Legal Person Dividend Taxation

18


Note: BSE charges per executed order regardless of the number of executions it may trigger.19

0

5

10

15

20

25

MontenegroSE

Bucharest SE BSE-Sofia Ljubljana SE Zagreb SE Belgrade SE Banja LukaSE

MacedonianSE

Trading fees (bps)

Purchase Sale

Why invest in BulgariaIndex

Last 52w performance

SOFIX 48.51%

WIG 29.39%

ATX 29.22%

BET 27.64%

MBI10 24.50%

DAX 23.90%

BUX 22.64%

CAC 40 18.93%

RTS 17.17%

BELEX15 16.69%

FTSE 100 15.41%

CROBEX 12.64%

ISE 100 10.93%

SMI 10.70%

PX Index 10.02%

SASX-10 -11.72%

-40%

0%

40%

80%

120%

160%

200%Local Indices Performance

BGREIT SOFIX BGTR30

20

In the pipeline

Order routing platform

Five exchanges connected

Four more to join

FIX 4.4 implementation

Expected launch Q4 2017

Full domestic debt coverage

Stepping stone for other instruments

SME Private market

SME Growth Market

Crowdfunding Platform

21

Government Debt Market

Focus onSMEs

But still….why?

Attractive Valuations

Efficient infrastructure

FavourableTaxation

Opportunities

22

Thank you!

bulgarian capital markets at a glance - bse-sofiadownload.bse-sofia.bg/presentation/1.3. bulgarian...

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