BG Asset Management Before & After 19 May 2011 Vienna
BG Capital Market - Brief History The first stock exchange is founded on May 1st, 1914 and exist till WWII 1991 the capital market is revived and the First Bulgarian Stock Exchange (BSE) is officially registered; number of regional exchanges within next years 1995 the Securities, Stock Exchanges and Investment Companies Act is adopted; a Securities and Exchange Commission is set up and the regional stock exchanges merge into The Bulgarian Stock Exchange JSC 1996 the Central Depository starts operating 2000 the Public Offering of Securities Act replaces the previous law 2003 the new Financial Supervision Commission takes up its duties 2007 85 licensed brokers (34% banks) 2008 BSE successfully launched the Deutsche Boërse electronic trading system XETRA 2011 62 licensed brokers including banks consolidation to continue till the end of 2011 forthcoming privatisation of 51% of BSE, remaining shares belongs to banks and brokers
Legal framework and institutions Legal framework fully complying with EU Directives and international standards Supervision through a single regulatory body - the Financial Supervision Commission(FSC) Well functioning co-ordination between the key institutions&: Bulgarian Stock Exchange Financial Supervision Commission Central Depository brokers/dealers associations Modern and efficient infrastructure, fully electronic remote trading, settlement cycle-t+2 Strict information disclosure rules for the public companies
Trading on BSE Traded instruments Equities Bonds /Government, municipal, mortgage & corporate/ Rights Compensatory instruments Warrants Trading platform Xetra /strategic partnership with Deutsche Boerse/ as of June 16th 2008 A major step towards creating an international securities market integrated with leading capital markets BSE visibility improvement
Capital Market Performance Turnover downward trend of the recent years remained unchanged in 2010. The major reason for the last years decrease is the lack of foreign investors, who were a driving force in 2007. Market Capitalization is low compared to Western and Eastern Europe. Structural problems such as the low purchasing power, the small scale companies and the relatively low free float impede possible growth.
Capital Market Performance
ASSET MANAGEMENT Market Overview Young, inmature and fragmented market Low awarenes Low penetration High potential Local AM AuM as of 31/04/11 EUR 243mln About 100 funds in 4 main investment strategies, according to risk exposure 37 licensed asset managers 3 Asset Managers hold more than 50% of the market in 18 mutual funds Foreign investment funds distribution Total AuM accumulated in the country EUR 247 mln as of 31/03/11/ Distributed mainly via the group s local bank branches Biggest player Pioneer Investments through Unicredit Bulbank branches Other participants asset management arms of OTP, Raiffeisen, Societe Generale, Piraeus Bank, Eurobank EFG etc. Assets under management according to fund types (in millions EUR) Dec 2007 Dec 2008 Dec 2009 Dec 2010 March 2011 Type of Funds Number of Funds Assets under Management Number of Funds Assets under Management Number of Funds Assets under Management Number of Funds Assets under Management Number of Funds Assets under Management Total Investment Funds 176 612 171 233 290 329 342 449.3 375 455 Foreign Investment Funds 108 153.5 87 86.7 197 167.5 244 253.8 276 247.3 Local Investment funds 68 458.9 84 146.3 93 161.6 98 195.6 99 207.4 Source: BNB
Penetration GDP Per Capita (PPP) in USD Sources: IMF, EFAMA Bulgaria the lowest penetration AuM/GDP per capita (PPP)
Bulgarian Mutual Funds 2005-2011 Source: BNB, FSC
Bulgarian Mutual Fund Market 31/04/2011 Source: Data from the Bulgarian Association of Asset Managers and the Bulgarian Stock Exchange
The Product Mix BG asset managers Lack of wide variety of differentt product types (ELANA manages the biggest product portfolio with 7 funds and individual portfolio management) Product segmentation attributes Risk profile most important Currency Geographic coverage relatively new for the market (mainly BG market; other emerging markets; only couple with global exposure Sector funds
The Product Mix Source: Baud, EFM; EFAMA
AuM by product type Recent Trends in BG AuM (BGN mln) Recent Trends in EU AuM (EUR billions) Equity Balanced Bond/ low risk Money Market Source: Baud, EFM Source: EFAMA
The Client *Other financial intermediaries includes PE funds; factoring and lease companies; investment intermediaries; asset managers; etc Source: BNB
Private Banking - Asset Managers No clear cut Private Banking or Wealth Personal consultant/ PM direct contact Management service No clear understanding about service coverage No special products Low minimum investment amount that Research and analysis free access 50,000 BGN minimum investment amount Individual portfolio management could not allow service upscale Lack of IT solutions that could support Investment advisory upscale
Private Banking the Banks No clear cut Private Banking or Wealth Personal consultant Management service Better understanding of the scope There is only one bank offering specialy designed products and services for that segment; premium Information about promotions and new products - 50,000 BGN 150,000 BGN minimum investments - Net income 2,000 BGN + - Regular monthly inflow Privacy service and personal aproach Special rates and conditions Out of the branch service
ELANA Model Benefit the sinergy of the group - 20 years of expertise in the areas of asset management; trading on financial markets; investment banking; business consultancy; real estate investments etc. - Wide product variety - Access to all markets Client centric model Retail focus - Well established distribution network with nationwide coverage - Sustainability and better resistence to market dynamics Successful partnerships - Auerbach Grayson - SAXO Bank - KBC Asset Management - MAN - Local banks and other third party distributors
Main Conclusions Great potential for asset management industry in Bulgaria Room for know-how import Need for market consolidation
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