capital markets 41

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Business Environment Macroeconomic Outlook Capital Market Banking Sector Privatization and Investments Economic Freedom Business News In the Spotlight Coming up... 5.7% 15.2%

Bonds

Graphic 13. MONEX20

Looking at shares on an individual company basis, the highest monthly trade volume was recorded in March, during the first half of 2012; Aluminum Plant shares reached a volume of 3.98 million through a series of block transactions. Apart from this, the most traded shares during the last six months were those of Telekom Montenegro which achieved € 1.106 million on the A list.

14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12

Graphic 14. MONEXPIF 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12

Graphic 16. Turnover in PIF’s 900,000

16,000,000

800,000

14,000,000

700,000

12,000,000

600,000

10,000,000

500,000 8,000,000 400,000 6,000,000

300,000

4,000,000

200,000

2,000,000

100,000 0

Atlas Mont

Eurofond

HLT

MIG

Moneta

Trend

Volume

842,236

64,161

11,959

0

274,274

323,003

Shares

14,910,481

3,510,254

1,306,600

0

4,591,381

7,654,191

Source: Montenegro Stock Exchange (www.montenegroberza.com)

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Trade on the Stock Exchange

During the first half of 2012, three types of securities were traded: company shares, privatizationinvestment fund shares and bonds which included Government bonds and Ministry of Finance bonds. The greatest turnover was recorded in the area of company shares (79.1%), followed by investment funds (15.2%). The total turnover of bonds amounted to 5.7%. All types of securities recorded a decline during this same period.

79.1% PIFs units

During the first half of 2012, the Montenegrin capital market was characterized by negative trends. This was followed by a decrease in the volume of trade and also in the number of transactions when compared with the same period of 2011. This indicates that the capital market crisis is not yet over. The greatest turnover was recorded in the area of company shares, followed by investment funds and bonds.

During the first half of 2012, turnover on the Montenegrin stock exchange amounted to only €9.99 million, thus showing a decline of 62.8% in comparison with the same period in 2011. The average monthly turnover during the first half of the current year was only € 1.66 million, which was much lower than the average monthly turnover in 2011 (€ 4.47 million). This indicates that the capital market crisis is not yet over. The decline in the turnover of the stock exchange during the first half of 2012 was also followed by a decrease in executed transactions. During the first half of 2012, a total number of 3,319 transactions was completed. This was 45% less than during the same period in 2011 (7,319 transactions).

Graphic 15. Turnover structure

Shares

Capital Markets

0

Stock Exchange Indices

MONEXPIF

The Montenegrin stock exchange uses the two indices, MONEX20 and MONEXPIF. In March 2012, the Montenegrin Board of Directors adopted a new methodology for calculating the indices MONEX20 and MONEXPIF. Their aim was that, through the adoption of a new method of calculating the index, a more accurate representation of the capital market situation could be reached. The new method that has been adopted for calculating the index is available on the official website of the Montenegrin stock exchange.

The value of this index has declined steadily with just a few oscillations since the beginning of 2012. It reached its highest level on 2 February with a total of 4.273 points. The lowest point was recorded on 21 June with 3.022 points. The index value was influenced in such a way that a similar trend was evident in all of the privatization investment funds.

MONEX20 The value of the Montenegrin Stock Exchange, MONEX20, upon which MSE’s 20 most liquid companies are traded, has decreased steadily since the beginning of 2012 with just a few oscillations. The highest value that was reached by MONEX20 during the first half of 2012 was recorded on 23 March with 9,807 points. The lowest value was recorded on 22 June with 8.408,56 points. Variations in index value have influenced all of the changes shown by shares represented in this index. In particular, the following have been most greatly affected: Telekom Montenegro, Jugopetrol Kotor, Prva Banka, Montenegrin Electric Transmission System and Container Terminal and General Cargo JSC Bar.

Privatization – Investment Funds on the Stock Exchanges The total volume of trade involving PIF shares during the half quarter of 2012 amounted to €1.516 million. This showed a decrease of 12% when compared with the same period of 2011 (about €1.721 million in trade volume). The significant increase in turnover in the privatization-investment fund was due to a series of block transactions in Atlas Mont shares which totaled €278,500. In total, during the first half of 2012, 732 transactions were made. These transactions represented a total of 31.972 million shares. The most actively traded shares during this period were Atlas Mont (14.910 million shares). The privatization-investment fond "MIG" JSC Podgorica has changed its name to "Society for Task Management and Real Estate Management MIG" JSC Podgorica. It started to trade its shares on the free stock market, by auction, on 27 March.


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