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Security Markets: Belarus, Ukraine and Russia

Seminararbeit 2010 22 Seiten

VWL - Fallstudien, Länderstudien

Leseprobe

Table of Contents

List of Figures

List of Tables

List of Abbreviations

1. Introduction

2. Securities Market of Belarus

3. Securities Market of Ukraine

4. Securities Market of Russia

5. Conclusion

Bibliography

Annex

List of Figures

Figure 1 : ATX and BCSE-Index Apirl 2009 - March 2010

Figure 2: PFTS 2005-2010

Figure 3: Total turnover of PFTS Stock Exchange 1997-2008 in UAH and US-$ mln

Figure 4: Structure of Trade 2001-2008

Figure 5: Trading volume on MICEX in US-$ and RUR

Figure 6: GKO-OFZ/Total-volume-Ratio 1993-2009

Figure 7: RTS chart 1995-2010

List of Tables

Table 1 : Securities Trade Volume in Belarus 2006 - 2008

Table 2: Shares and bonds trade volume at VIE and BCSE in 2006 -2008

Table 3: Risk measure comparison

Table 4: Ukrainian Stock Exchanges (2005)

Table 5 : Calculation of risk performance benchmarks

Table 6: Composition PFTS-Index May 21, 2010

Table 7: Turnover of PFTS Stock Exchange 1997-2008 in UAH and US-$ mln

Table 8: List of securities forming RTS Index, valid from March 15 to June 11, 2010

List of Abbreviations

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1. Introduction

" The term ‘‘security’’ means any note, stock, treasury stock, security future, bond ..., in general, any interest or instrument commonly known as a ‘‘security’’, or any certificate of interest or participation in, ... or right to subscribe to or purchase, any of the foregoing."[1]

This citation of the United States "Securities Act of 1933", is an adapted and shortened definition of the various and numerous types of securities, which already existed 77 years ago. Just a small introduction to the wide field of securities, which is growing even today. Due to this fact and the limited framework of this paper, only the core of the security markets (SMs) in Belarus (BL), Ukraine (UKR) and Russian Federation (RU) will be considered.

BL, UKR and RU are part of the so called "emerging markets" (EM). EMs are on the way to develped markets what explains the term "emerging". In financial world these EMs are said to feature high profits, but also high risks because of political change, developping markets and several other factors influencing investor behaviour. This paper will try to find out if the statement of high profits and higher risk is true compared to developed western markets.

OECD defines EM economies with the help of Gross National Product (GNI). This GNI is used to create peer groups of countries depending on the calculated membership to such a peer group. EM economies belong to "low and middle income economies"[2]. According to OECD[3] UKR is a "lower-middle-income economy", BL and RU are "upper-middle-income economies". Hence, the term of "EM" is a valid one in this context. As mentionned above EMs are on the way to completed and competitive markets, compared to western ones like Frankfurt Stock Exchange (FSE) or London Stock Exchange (LSE), for instance. Impediments these "post-transitional" markets have to take are of diverse character. EMs need a higher market capitalisation to lower volatility of SMs, creation of corporate bond markets to establish a further field of corporate finance[4] or installation of modern trading systems, as conducted at BCSE[5] two years ago.

In the present paper SMS of BL at first, UKR secondly and at third position RU will be discussed and analyzed as far as data are available and credible. The lattest constraint is especially related to BL, publishing a well-elaborated report but considering political circumstances in a non-free country one has to rely on the data seeming to be serious.

2. Securities Market of Belarus

The Belarusian Currency and Stock Exchange (BCSE) is a quite young stock exchange compared to western ones. BCSE was founded in 1998 on behalf of the president of the Republic of BL and is situated in Minsk. BCSE is the only market platform for trading in foreign currencies and the only institutional stock exchange of the country. Tradable securities are shares and bonds of legal Belarusian entities, municipal loan bonds and bills of exchange. The lattest are represented by bills of BelTransGaz, a Belorusian- Russian energy-provider, without exception[6]. These days, BCSE also installs the first legal futures-market, which will not be discussed in this paper, because futures represent a kind of contract to trade financial instruments like securities, for instance and so futures are no securities.

Belarusian SM grew in recent years, as table 1 shows. The table shows a total growth of 278% of the trade volume from 2006 to 2008. This number is explained by the exorbitant increase of state securities on the secondary market. But also remarkable is the sudden rise of corporation financing - shares and bonds in this case. The main explanation for that is a slow ending of the "moratorium on privatised equity carve- out[7] " in BL. This moratorium mainly prohibited the foundation of new subsidiaries and then offer them to the public (IPO).

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Table 1: Securities Trade Volume in Belarus 2006 - 2008

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(Source: adapted from Annual Report of Belarusian Currency and Stock Exchange (2008), p. 5)

In order to get a better understanding of the traded volume at BCSE, Austrian equivalent Vienna Stock Exchange (VIE) is used. The population of Austria is approximately 8.4 m, what is quite near to the number of inhabitants of BL with 9.5 m. The alps-republic can be seen as a well-developed SM on western standards. In 2007 VIE achieved a total volume on the official and second regulated market of more than 260 bn Us-$8,9 of all products, in 2008 VIE reached a volume of about 199 bn US-$. Table 2 shows a comparison of the VIE and BL stock exchanges.[8] [9]

Table 2: Shares and bonds trade volume at VIE and BCSE in 2006 -2008

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(Source: adapted from Annual Report of Belarusian Currency and Stock Exchange (2008), p. 5 and Annual Report of Vienna Stock Exchange (2008), p. 2)

As one can see in the table above the differences between volumes at VIE and BCSE are quite big, in 2008 VIE reached a volume of more than 23 times of the BL-volume. Reasons for this huge gap is Viennas long time integration in European and international SMs (foundation in 1771), while BL developes market yet and is mostly focused on domestic considerations, e.g. the dominant role of government securities emphasizes the lack of civil and institutional investors of western character.

This focus on domestic needs leads to a separation of international financial markets with some positive effects. For example, less volatility in ones own market (see table 3) and protection of international financial crisis, as it is taking place since 2007. The other side of the coin is that there is no profit on BL SM. Figure 1 shows the index of BCSE and its stability since April last year and in comparison the VIE index ATX within the same period.

Figure 1: ATX and BCSE-Index Apirl 2009 - March 2010

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(Sources: adapted from Wiener Boerse (2010), http://www.wienerborse.at/quote/ ?ID_NOTATION=92866&TYPE=I and Federation of Euro-Asian Stock Exchanges (FEAS) (2010), http://feas.org/Member.cfm?MemberID=53)

Table 3: Risk measure comparison

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(Sources: adapted from Wiener Boerse (2010), http://www.wienerborse.at/quote/ ?ID_NOTATION=92866&TYPE=I and Federation of Euro-Asian Stock Exchanges (FEAS) (2010), http://feas.org/Member.cfm?MemberID=53)

Risk performance indicators of BL-Index show a much less risk compared to ATX (for values of calculation see annex point 1, please). This is very special about BL secuties market, because normally high volatility is a main character of an EM. In figure 1 ATX declines a bit at the end and seems to be quite stable but in the last quarter of 2008 it decreased from about 3,500 index points (pts) to 1,460 pts until march 2009, afterwards ATX recovered. Due to missing data of BSCE-Index for the time before April 2009 the comparison of BSCE-Index and ATX consists of the period from April 2009 until March 2010 only. Otherwise the standard deviation and variance of ATX would be much higher than in table 3.

Further indicators for underdevelopment of BL SM are the low market capitalisation of BL with 9.1 bn US-$[10] in 2009, a result from strict law due to political circumstanes in BL (remark: market capitalisation of VIE 2009: 110.89 bn US-$) and the absence of several financial instruments.

The annual report names repos, interest and discount bonds by the government, futures and corporation bonds and shares as the only financial instruments available, while a future market is being installed.

Thus, BL SM is a very special EM due to its low volatility and in recent years. The market is on the way to an open one, however, there is still much to be developed and improved. The market needs deregulation, and an opening to the world, to become part of it.

[...]


[1] United States Securities and Exchange Commission 2010, http://www.sec.gov/about/laws/sa33.pdf

[2] Organisation for Economic Co-operation and Development (OECD), Corporate Responsiblity Practices of Emerging Markets (2005),p. 5

[3] Organisation for Economic Co-operation and Development (OECD), Country and Lending Groups (2010)

[4] Schroeder (2001), p. 181

[5] Annual Report of Belarusian Currency and Stock Exchange (2008), p. 2

[6] Belarusian Currency and Stock Exchange (2010), http://www.bcse.by/eng/Stock.php

[7] Annual Report of Belarusian Currency and Stock Exchange (2008), p. 5

[8] Annual Report of Vienna Stock Exchange (2008), p. 2

[9] German Federal Bank (Deutsche Bundesbank) (2010), http://www.bundesbank.de/statistik/statistik_zeitreihen.php?lang=de&open=devisen&func=row&tr=WJ5 636 The amounts in Euro are transformed into US-$ with the average course of the certain year. In this case: 190 bn Euro of trade volume of VIE in 2007 is multiplied with 1.3705 leading to the amount of 260 bn US-$.

[10] FEAS. See loc. cit. and International monetary fund Financial Stability Assessment Republic of Belarus 2005, p. 13

Details

Seiten
22
Jahr
2010
ISBN (eBook)
9783640984930
ISBN (Buch)
9783640985210
Dateigröße
1020 KB
Sprache
Englisch
Katalognummer
v177070
Institution / Hochschule
Otto-von-Guericke-Universität Magdeburg
Note
1,7
Schlagworte
Security market Belarus Ukraine Russia economy economic development economic development

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Titel: Security Markets: Belarus, Ukraine and Russia