Bulgarian Capital Markets at a Glance Ivan Takev, CEO, BSE London, May 18 th 2017
Disclaimer The materials, contents, and references may not be used for and shall not be deemed to be a public offering of securities in the United Kingdom. These materials do not constitute an offer of Instruments to the public in the United Kingdom. These documents do not constitute advertisement, neither a prospectus for the purposes of Directive 2003/71/EC. Investors should not subscribe for any securities referred to in these documents. This presentation is set forth for informational purposes only. By attending all viewers acknowledge that (i) the presentation of this material neither constitutes an offer to sell nor a solicitation of an offer to buy the financial instruments described, (ii) no recommendation is made concerning the financial instruments described and (iii) it may be unlawful to offer to sell 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 and commented. 2
Milestones Premium Market BG 40 CGIX Bulgarian Stock Exchange 1995 1996 SEC License 1997 SOFIX 2000 2004 2005 2008 2010 2011 2012 New Market Segmentation 2013 2016 BGX Bulgarian Central Depository First IPO BSO 3
Infrastructure overview MiFID II ready Easy remote access Commonly adopted trading model XETRA Market Highspeed operation Robust functionalities Large capacity 4
Macro Highlights 2013 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
EUR (billion) Macro Highlights 50 45 40 Market Cap/GDP 50% 45% 40% 35 30 25 20 15 10 5 0 35% 30% 25% 20% 15% 10% 5% 0% Source: BNB * Pegged to DEM (hence to EUR) since 1999 Mcap GDP Mcap/GDP 6
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 2 700 650 600 550 500 450 400 350 300 250 200 SOFIX performance Jan 2010-May 2017 22 20 18 16 14 12 10 8 6 4 2 0 690 640 590 540 490 440 390 SOFIX performance Last 365 days 24 20 16 12 8 4 0 SOFIX value P/E P/B SOFIX value P/E P/B 7
USD (billion) Market Highlights (2) FDI vs. SOFIX performance 15 2 500 12 2 000 9 1 500 6 1 000 3 500 0 0 FDI Source: The World Bank, BSE 8 SOFIX
Market Highlights (3) 30% Turnover Velocity (Main Market vs. SOFIX constituents) 25% 20% 15% 10% 5% 0% Source: The World Bank, BSE BSE Turnover Velocity SOFIX Turnover Velocity 9
Market Cap (EUR billion) Avg Monthly Traded Value (EUR Million) Market Highlights (4) 16 14 12 10 8 6 4 2 0 Main Market Cap (eqities only) and Monthly Traded Value 350 300 250 200 150 100 50 0 Average Monthly Traded Value Market Cap 10
Market Highlights (5) Monthly Traded Value vs. 12-month Median Monthly Traded Value 160 140 120 100 80 60 40 20 0 Monthly Traded Value 12-month median Monthly Ttraded Value 11
Market Highlights (6) 4.00% Potential median spread after two-sided execution of EUR 10,000 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% Source: BSE Sopharma Advance Terrafund Chimimport 12
Market Highlights (7) 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 companies http://www.fsc.bg/, http://baud.bg 13
EUR (million) Market Highlights (8) 115 Investment Funds AuM 600 110 500 105 100 400 300 200 95 100 90 12-2010 12-2011 12-2012 12-2013 12-2014 12-2015 12-2016 Bulgarian Investment funds total assets under management (EUR) 0 Total number of investment funds 14
Corporate Governance First corporate governance code 2006 2007 National Corporate Governance Code 2009 National Corporate Governance Committee 2011 CGIX 2012 Parallel English disclosure
EUR (million) Corporate Governance (2) 2 500 Total operating income /SOFIX and CGIX constituents/ 2 000 1 500 1 000 500-2011 2012 2013 2014 2015 2016 CGIX Constituents SOFIX Constituents 16
Why invest in Bulgaria 4.5% Dividend yield and interest rates comparison 10% 4.0% 4.06% 3.96% 9% 3.5% 8% 3.0% 2.5% 2.0% 1.5% 5.97% 1.18% 5.58% 1.49% 3.04% 4.93% 1.40% 2.01% 3.54% 1.87% 1.84% 1.50% 2.25% 7% 6% 5% 4% 3% 1.0% 0.93% 2.31% 2% 0.5% 1.15% 1% 0.0% 2011 2012 2013 2014 2015 2016 average dividend yield all listed companies average dividend yield SOFIX average interest rate on 6 m to 1y deposits 17 0%
Why invest in Bulgaria Natural Person Capital Gains Taxation Natural Person Dividends Taxation 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% Bulgaria Romania Poland Austria Germany UK 0% Bulgaria Romania Poland Austria Germany UK 30% 20% 10% 0% Legal Person Capital Gains Taxation Bulgaria Romania Poland Austria Germany UK 30% 25% 20% 15% 10% 5% 0% Legal Person Dividend Taxation Bulgaria Romania Poland Austria Germany UK Corporate Income Taxation 30% 25% 20% 15% 10% 5% 0% Bulgaria Romania Poland Austria Germany UK 0% tax on capital gains; 5% dividend withholding tax; 10% flat corporate & personal income tax 18
Why invest in Bulgaria 25 Trading fees (bps) 20 15 10 5 0 Montenegro SE Bucharest SE BSE-Sofia Ljubljana SE Zagreb SE Belgrade SE Banja Luka Purchase Sale SE Macedonian SE Note: BSE charges per executed order regardless of the number of executions it may trigger. 19
Why invest in Bulgaria Index Last 52w performance 200% Local Indices Performance SOFIX 48.51% WIG 29.39% ATX 29.22% 160% BET 27.64% MBI10 24.50% 120% DAX 23.90% BUX 22.64% 80% CAC 40 18.93% RTS 17.17% 40% BELEX15 16.69% FTSE 100 15.41% 0% CROBEX 12.64% ISE 100 10.93% -40% SMI 10.70% PX Index 10.02% SASX-10-11.72% BGREIT SOFIX BGTR30 20
In the pipeline Government Debt Market Focus on SMEs 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
But still.why? Favourable Taxation Efficient infrastructure Opportunities Attractive Valuations 22
Thank you!