Capital Marktets
We Introduce
CAPITAL MARKETS
Trade on the Stock Exchange
Stock Exchange Indices
During the first 4 months of 2013, turnover on the Montenegrin stock exchange amounted to € 7,49 million, thus showing a decline of 3.74% in comparison with the same period in 2012. The average monthly turnover during 2012 was only € 1.87 million, which was a little lower than the average monthly turnover in 2011 (€ 1.94 million). This indicates that the capital market crisis is not yet over. The decline in the turnover of the stock exchange during the first 4 months of 2013 was followed by an increase in executed transactions. During the first 4 months of 2013, a total number of 2.402 transactions were completed. This was 11,26% more than during the same period in 2011 (2.159 transactions).
The Montenegrin stock exchange uses the two indices, MONEX20 and MONEXPIF. The value of the Montenegrin Stock Exchange, MONEX20, upon which MSE’s 20 most liquid companies are traded, had started in 2012 with its constant decline and permanent oscillations, to reach its lowest value of 8.138 points on July 27th. Afterwards, the index kept rising until the end of the year, reaching its highest annual value of 9.184 points on December 31st. Index growth continued in January 2013, when it reached its peak of 10.247 points on 16th of January 2013, after which it begins to fall. Variations in index value have influenced all of the changes shown by shares represented in this index. In particular, the following were most affected: Telekom Montenegro, Jugopetrol Kotor, Prva Banka, Montenegrin Electric Transmission System, Atlas Bank and Container Terminal and General Cargo.
During the first 4 months of 2013, 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 (85.2%), followed by bonds (7,5%) and privatizationinvestment fund shares (7,3%). The shares of companies (6,24%) and bonds (36,9%) recorded an increase, while investment funds recorded a decrease in comparison with the same period in 2011 (69,02% respectively). Looking at shares on an individual company basis, the highest monthly trade volume was recorded in April, during the first 4 month of 2013; the First Bank of Montenegro shares reached a volume of 1.11 million on the A list.
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The value of the MONEXPIF index has declined steadily with just a few oscillations since the beginning of 2012. It reached its highest level on 13 August with a total of 4.007 points. The lowest point was recorded on 21 June with 3.022 points. From January 2013, the index also continued to decline and the lowest point in this year was recorded on 24 April with 2.608 points. The index value was influenced in such a way that a similar trend was evident in all of the privatization investment funds.
Privatization – Investment Funds on the Stock Exchanges
The total volume of trade involving PIF shares during the first 4 months of 2013 amounted to € 543.318 thousands, which is 60,03% less in comparison with the same period in 2012. In total, 565 transactions were made during the first 4 months of 2012. The most actively traded shares during this period were Trend (5.200 million shares), while the least traded were those of HLT (just 1 share). ■ TURNOVER STRUCTURE MONEX 20
MONEXPIF
DOING BUSINESS IN A CHANGING CLIMATE – building a case for adaptation (2)
by MSc Slavica Nikolic and MSc Dragana Mileusnic
Hydropower plant Piva (Source: http://www.a2amontenegro.eu)
In the previous issue we introduced the key issues surrounding the complex topic of climate change, its implications and potential adaptation options. We now present a success story, to demonstrate how accounting for climate change can bring benefits not only to the company but also to society as a whole, and thus inspire you to take this into consideration in your future business activities. We mentioned that climate change implications for businesses can be twofold; Originating from either physical hazards or regulatory frameworks. In this sequel, our focus is on damages and costs that may result from its physical manifestations. One of the climate impacts Montenegro is likely to face, is the change of the precipitation pattern. According to a recent study Technology Needs Assessment for Climate Change Mitigation and Adaptation for Montenegro, it is estimated that potential revenue loss caused by climate change at the Hydropower plant Piva may amount to around 7 million Euros per year as of 2030. Although this piece of information may seem a staggering figure, and
it refers to a distant point in time, it makes a striking point allowing us to perceive the potential scale of the problem. Clearly, for operational systems that are not as big and complex, the damages are likely to be less costly, but at the same time, these smaller companies might have weaker adaptive capacity, if having less resources at their disposal. So, if we are to prevent these types of losses, we need to act immediately. Alternatively, we will need to clean up after the damage has already been done. Governments and companies in developed countries invested substantial resources in technical advancements and research on this topic. Therefore, wise leaders should take from their experiences and learn valuable lessons that can be transferred and implemented in their respective sectors. Our focus in this issue will be at the sector that has been in the spotlight of Montenegro’s development agenda - energy. We mentioned potential variability of water resources and its implications for energy production, with particular emphasis on HPP Piva. Some of the world`s leading energy companies
experienced this similar problem years ago. One of them is HydroQuébec, Canadian utility company focused mainly on hydro source power generation. After an ice storm in 1998, they suffered $US 705 million damages. This was a wakeup call for the company’s management, who decided to allocate over a billion US dollars in infrastructural adjustments. They also invested in building a solid knowledge base enabling them to make better informed decisions in the future. One of the challenges they encountered is the difficulty of quantifying benefits from avoided climate change impacts, a problem concerning world class economists for years. Still, despite all the difficulties, Hydro-Québec expresses a high level of satisfaction with the gains resulted from their climate change adaptation investment program. Taking our case back to HPP Piva, we acknowledge that a tremendous amount of resources are needed for a similar programme to be implemented there. On the other hand, its owners, Montenegrin Electricity Company (EPCG) and their Italian partner A2A, might need to consider integrated management of their resources, and before taking serious investments in the infrastructural domain, consider collaborating more tightly with research institutions and strengthening the data allowing them to plan more accurately. We showed that uncertainty in this area is significant, but in accordance with the precautionary principle, we suggest incorporating this issue seriously in your future operations, planning and design. Similar recommendations can be made for other types of businesses potentially affected by climate change, such as those considering investing in mini and micro scale HPPs whose specific location and natural conditions of a site will determine whether they will succeed or fail in the years to come. Other opportunities will come from fast-changing regulations in the areas of climate and energy. We will provide an in-depth analysis in the following issue of Montenegro Business Outlook. To be continued…
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