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The stock exchanges in Central Europe look back at a lively year 2014. The largest stock exchange group in the region, the CEE Stock Exchange Group (CEESEG), comprising bourses in Austria, the Czech Republic, Hungary and Slovenia, had a mixed track record on the four different markets. The highlights of the year 2014 include 28 large capital increases (raising a total volume of around EUR 4.38 billion), three initial public offerings (FACC, Norbi Update Lowcarb and Pivovary Lobkowicz Group; total volume of around EUR 225 million) and significant corporate bond issues.
On the other hand, the geopolitical crises have been weighing on three of the four leading indices. Blue chips in the banking and oil industry were particularly hit by the Russia/Ukraine crisis. The CEESEG index, which comprises the largest stocks within the group, was down 13.0% last year.
Equity trading stayed at a high level throughout the year and was approx. 6% higher on average than in the previous year. Total equity trading volumes within the group stood at EUR 72.16 billion as of December 2014 (2013: EUR 68.15 billion). The most active trading members were Erste Group Bank (resp. Česká spořitelna), with a total trading volume of EUR 6.69 billion, WOOD & Company Financial Services (EUR 6.09 bn), Deutsche Bank (resp. DB Securities) (EUR 4.34 billion), Raiffeisen Centrobank (EUR 4.22 billion) and KBC Securities (resp. Patria Finance) (EUR 4.04 billion).
“The low oil price and the declining Russian rouble pulled down individual heavyweight stocks, which in turn impacted the main indices. Nevertheless, EUR 4.6 billion more equity capital was raised this year than in the past two years combined”, explains Michael Buhl, Joint-CEO of CEESEG. “For 2015 we are moderately optimistic. Lower energy costs and an export-supporting euro trend should have a positive influence on capital markets. A positive growth outlook for Eastern European core markets supports these expectations, provided that global monetary policy does not fall short of expectations. We continue to see significant catch-up potential for the group’s stock markets.”
CEESEG strengthens services
The CEESEG managed to strengthen its positioning as a service and infrastructure provider. Within the group, five new international trading members (Hudson River Trading, Spire Europe, Societe Generale for Budapest and Prague Stock Exchange, Acon Actienbank) and two new cooperation exchanges with regard to data vending (Kazakhstan Stock Exchange and Zagreb Stock Exchange) joined in 2014. Furthermore, a Corporate Action Service Tool was launched in order to enhance transparency within the region. CEESEG continues to be the international gateway to Central and Eastern Europe through its services and solutions.
“The role of CEESEG as an infrastructure provider has greatly increased over the past decade. Our Stock Exchange Group is a strong, well-connected player in the CEE region. The Exchange Group covers the entire region through extensive cooperative ventures with six local exchanges in data vending (in total 12 markets are covered). Regarding index licensing, CEESEG has a network of 95 international and local clients (banks, asset managers, insurance companies, stock exchanges). Our goal is to further strengthen this position and continue to harmonise our markets so that we attract ever more international trading members,” says Petr Koblic, Joint-CEO of CEESEG.
Review of 2014 by individual market within the CEE Stock Exchange Group
Budapest Stock Exchange
The BUX decreased by 10.3% due to the Russia-Ukraine crisis that put the largest Hungarian stocks under pressure. The top performers within the leading index were ANY Security Printing (+49.9%), Tisza Chemical Group (+34.4%) and FHB Mortgage Bank (+12.6%). As of 31 December 2013, market capitalization1 on the Budapest Stock Exchange was EUR 12 billion, and average monthly equity turnover2 was EUR 505.5 million. The Budapest Stock Exchange recorded one IPO (Norbi Update Lowcarb Plc.) and 13 capital increases on its equity market in 2014 with a total volume of EUR 42.6 million. As a result of recent Hungarian monetary policies, the base interest rate fell to an all-time low, which is expected to drive domestic savings to the exchange.
Ljubljana Stock Exchange
The SBI TOP index was positive in 2014 for the third consecutive year, rising 19.6% year-on-year. This trend is a result of several factors: privatisations, acquisitions, the market performance of the listed companies, the stabilisation of the banking sector and theeconomic recovery of Slovenia. The top three performers from the leading index were the international port Luka Koper, up 139.4%, followed by the insurance company Pozavarovalnica Sava and white goods manufacturer Gorenje, up 96.3% and 33.8% respectively. As of 31 December 2014, market capitalization1 on the Ljubljana Stock Exchange was EUR 6.2 billion, and average monthly equity turnover2 amounted to EUR 50.7 million. In 2014, LJSE recorded six capital increases (EUR 214.5 million) and three new corporate bond listings (EUR 120.2 million).
Prague Stock Exchange
The PX was down 4.28% in 2014. Utility provider ČEZ (+14.3%), brewery Pivovary Lobkowicz Group (+9.0%) and textile producer Pegas Nonwovens (+8.1%) posted the highest performance year-on-year. As of 31 December 2014, market capitalization1 on the Prague Stock Exchange was EUR 22.6 bn, and average monthly equity turnover2 was EUR 464.3 million. There was one IPO (Pivovary Lobkowicz Group) and five capital increases with a total volume of EUR 187.8 million. In addition, there were 11 new corporate bond issues (EUR 558 million).
Vienna Stock Exchange
The ATX dropped by 15.2% in 2014. The geopolitical crises put pressure on banking and oil heavyweight stocks in the leading index. The three top performers were lighting manufacturer Zumtobel (+64.8%), fibre producer Lenzing (+26.7%) and airport Flughafen Wien (+25.9%). As of 31 December 2014, the market capitalization1 on the Vienna Stock Exchange was EUR 80 billion, and average monthly equity turnover2 was EUR 4 billion. Five listed companies and one initial public offering (airplane component manufacturer FACC) tapped the market for fresh capital and raised a total of around EUR 4 billion. The 39 new corporate bond issues resulted in a record volume of over EUR 7.2 billion.
Commodity exchanges
The POWER EXCHANGE CENTRAL EUROPE strengthened its position as the leading energy derivatives exchange in CEE. On 1 September 2014, the offer of electricity futures was expanded to include Polish and Romanian products. Therefore, it is now possible to use PXE to trade futures in Czech, Slovak, Hungarian, Polish and Romanian electricity. Thanks to the cooperation with the Central European Gas Hub (CEGH), PXE also trades Czech gas futures. On 20 November 2014, PXE successfully completed the first electricity auction for end customers. The highest trading volumes in 2014 were in Czech electricity, i.e. 18,397,546 MWh. This was followed by the market of Hungarian products (total volume of 2,948,693 MWh) and the Slovak market (973,545 MWh). As such, the total volume traded reached nearly 21,581,904 MWh. The volume of Czech gas trading was 745,080 MWh.
The Central European Gas Hub (CEGH) also managed to strengthen its position. In 2014, 440 TWh of natural gas were traded on the CEGH Virtual Tradint Point. At the CEGH Gas Exchange, operated by Vienna Stock Exchange, the exchange traded volume increased by more than 60% to 21.27 TWh, compared to the previous year. A monthly all-time high at the CEGH Gas Exchange was reached in October with a traded volume of 2.8 TWh.
1 according to Federation of European Exchanges, regulated and unregulated markets, domestic
2 according to Federation of European Exchanges, single count, regulated and unregulated markets, domestic and foreign
