Category: News from the Market

The FESE membership, comprising of Exchanges across Europe, are not immune from the effects triggered by the rapid spread of Covid-19 and its impact on the economic environment. Whilst this situation is not without its challenges for exchanges, it is crucial that the markets remain open.

Regulated stock markets fulfil a social and economic function that must prevail in times of uncertainty.  Exchanges play a key role in providing price formation, transparency and liquidity. Preventing them from fulfilling this role would have a huge impact not just on the economy but society too.

These functions have been put to the test in the past for example during the financial crisis – when other sources of liquidity dried – exchange markets successfully continued to operate. This situation is no different, exchanges should continue to be operational to maintain trust.

FESE Members’ guiding principles remain transparency and objectivity, especially in these times of uncertainty.

European Exchanges will and should continue to remain open at all times to ensure safety, integrity and fairness in a secure and transparent manner.

1 – Technically and operationally: Markets continue to function in an orderly and transparent manner despite the extreme trading conditions triggered by the Covid-19 crisis. The controls and circuit-breakers in place work normally and with the necessary flexibility to meet market demand.  Contingency plans have been activated and will ensure everything is working as it was designed, including in the context of “working from home” protocols.

2 – Orderly functioning of financial markets: The constant news flow results in a continuous revision of investors’ valuations of securities and is generating the need to rebalance portfolios dynamically. It is expected that the current crisis will continue to generate both negative news flow, for example to lock-down decisions, and positive news flow, for example to the impact of significant  government support plans. Investors  need to adapt to the changing economic circumstances and the controls in place at trading venues are even more important in such volatile market conditions with  circuit-breakers  allowing investors to absorb new information. More generally, the pricing of risk needs to remain transparent, accessible and reliable across asset classes to allow investors to value portfolios and make informed investment and hedging decisions under these volatile conditions.

3 – Contractually: The closure of markets would trigger all kinds of procyclical contractual clauses in a very wide range of financing and even operational contracts These  potential and open-ended consequences could generate an unpredictable number of defaults. Derivatives contracts in particular are seen as reliable with observable reference prices allowing for an  orderly expiry and settlement process. These instruments are often used as proxies or hedging tools for many related OTC markets, for example credit markets. A closure of the lit markets would likely have a material impact on the functioning of a broad array of OTC markets given the removal of key hedging tools that would render broader risk management extremely challenging.

4 – Regulatory and litigation consequences as well as effects on smaller investors: A closure of markets would trigger the massive expansion of all sorts of off-market bilateral arrangements outside of transparent trading venues and without the protections prevalent on trading venues. All investors would be impacted by such a situation, but small investors would be worst hit by a move to such opaque arrangements concluded between professional investors as they  would only be able to adjust their positions at the re-opening of the reference trading venues.

Closing the markets would not change the underlying cause of the market volatility,  it would remove transparency of investor sentiment and reduce investors access to their money; all of which would compound current market anxiety and result in a negative decline in investor outcomes.

FESE Members remain attentive to global and European developments and will work towards maintaining a safe, transparent and fair market space in Europe at all times.

TIRANA, Feb 4 (Reuters) – Albania is planning to issue a Eurobond of up to 600 million euros ($663.54 million) in May rather than November as originally planned, Finance Minister Anila Denaj said on Tuesday.
The country had budgeted to borrow 500 million euros around November 2020 before it was hit by a quake late last year that killed 51 people and left around 17,000 people homeless.
Denaj said they had brought the process forward and would decide in April whether to borrow more to cover rebuilding needs.
“In this way, we could find room in the budget to use it either in the reconstruction or other planned investments,” she told Reuters.
Less than half of the bond will pay back debt.
“We might raise the (Eurobond) ceiling a bit, from 500 mln to 600 mln, or 580 mln or 590 mln, depending on the need at the moment we enter the market,” Denaj added.
An international donors’ conference called by the European Union will be held in Brussels on Feb 17 to help former communist Albania, an aspiring EU member, fund the rebuilding. Government officials estimate it will cost one billion euros.
Denaj said they would select a legal adviser and lead bank manager for the bond in the coming days, adding that Standard&Poor’s assessed Albania’s credit rating a B+ with a stable outlook last week.
(Reporting by Benet Koleka; editing by Philippa Fletcher)

Source : Reuters (Original Link http://news.trust.org//item/20200204153545-t7t2x/ )

Credins Bank and American Bank of Investment (ABI Bank) have been officially licensed by the Albanian Financial Supervisory Authority (AFSA) to trade securities of private companies in addition to Government Securities. By a decision on December 19th 2019, the AFSA Board approved the extension of the brokerage license for these two institutions to provide securities trading activity in both, the Albanian Securities Exchange and retail market as well in the Republic of Albania.

Previously, the brokerage license was limited on trading Government securities. Once the green light for trading securities of private companies on ALSE is opened, Credins Bank and ABI Bank are now in possession of the license as brokers for companies that would be interested in trading their bonds or shares on the stock exchange.

After ALREG (the new financial institution to operate as CSD) received all the necessary licenses from at the end of  last year, it is no longer legally prohibited for Albanian companies to enter the securities market, either to raise capital through the sale of shares or borrowing through debt securities.

The listing of private companies into the stock exchange would mark a historic development, not only for the financial market, but for the entire Albanian economy. In recent years, some companies, mainly financial institutions, started rising capital by borrowing through private placement process.

Meanwhile, there is still hope that the stock exchange can get a boost from public companies. In 2018, the Prime Minister Rama announced the intention of Government to list Albanian Electricity Distribution Operator (OSHEE) on stock exchange, but this process is linked to the separation of this operator into some different companies, which has been a slow process so far.

Interest rates of debt government securities have started even the year 2020 with decline. T-Bonds with 10 year maturity were issued at the beginning of this week with a coupon of 5.29%, declining from the level of about 5.53% in the previous auction held in October last year. Ministry of Finance fulfilled almost the entire amount declared, around 4 billion ALL.

The demand to buy the T-Bonds through auctions was at the amount around 5.7 billion ALL, confirming a high interest from market to invest in government securities. Because of their long maturity, 10 year T-Bonds offer also higher returns in comparison with other financial instruments denominated in national currency. They are still the most appropriate investment for the long term oriented institutions, such as investment funds and especially, the pension ones.

The first auction of this year confirms the expectation for low interest rates during this year. The financial market is presented very liquid, taking in consideration the further decline of the interest rate. During the last year, inflation decreased beyond the Bank of Albania’s forecasts, at the level around 1.4%. In these conditions, the increase of interest rate, which could happen in the middle of this year, is expected to be postponed. Consequences in the economy from the November’s earthquake might also be a factor that will impose the preservation of low cost money from Bank of Albania (central bank).

SCAN

December 18, 2019 – The Zagreb Stock Exchange (ZSE) acquired 5.3% ownership of the Macedonian Stock Exchange (MSE) in a transaction reported to the Macedonian StockExchange.
This is the second acquisition of a share in a regional stock exchange by the Zagreb Stock Exchange, after acquiring 100% ownership of the Ljubljana Stock Exchange in 2015 from the Vienna Stock Exchange.

Zagreb Stock Exchange  has been successfully cooperating with the Macedonian Stock Exchange for many years, exchanging know-ho, ideas and expertise, and intensively since 2014, when SEE Link company was founded together with the Bulgarian Stock Exchange, with three stock exchanges sharing equal ownership. Cooperation was intensified earlier this year, when the Macedonian Stock Exchange signed an exclusive cooperation agreement with the Croatian company Funderbeam South-East Europe (Funderbeam SEE), in which the Zagreb Stock Exchange has 20% ownership, and is part of the Estonian Funderbeam Group, which operates a startup financing platform. The partnership with the Macedonian Stock Exchange is primarily educational and promotional in order to present local companies with opportunities to raise capital through this innovative platform with the aim of further developing their business and maturing to the stage of potential listing on the Macedonian Stock Exchange.

Connecting capital markets is a logical development path not only regionally but globally as markets – especially smaller ones – need greater visibility and investors are looking for a more efficient and economical service. The experience we gained after the acquisition of the Ljubljana Stock Exchange is very positive, and we believe that some of it will be successfully implemented following our new role as MSE minority shareholders. Through our experience in Croatia and Slovenia we are aware that every regional economy needs a strong national capital market and in this respect we will help strengthen the role of the Macedonian Stock Exchange in the local economy. We believe that MSE has significant potential for growing and expanding its product range and we aim to actively participate in its development, especially in light of the alignment of Macedonian legislation with European legislation, in which we have significant experience, said Ivana Gažić, President of the Zagreb Stock Exchange Management Board.

ALREG is licensed from Bank of Albania as a settlement system operator. This license opens definitely the path to the listing of the private companies at Albania Securities Exchange (ALSE). The registry is a necessary link for the securities function, because there are administered data and the ownership rights upon them.

ALREG is licensed as a securities registry from the Albanian Financial Supervisory Authority on January of this year. But, to totally complete its function regarding the services on securities trading, it is needed another license from the central bank to operate as a cash payment operator. Through this function, ALREG will simultaneously make the transfer of the ownership rights of the traded securities and the cash payment form the buyer to the seller.

The Albanian Securities Exchange (ALSE) started its activity on February last year, by trading Albanian Government Treasury Bills and Bonds.  Starting from the February of this of this year, ALSE is officially licensed to trade also the securities issues by private business. The complete licensing of ALREG provides the opportunity to ALSE to practically trade these securities.

During the last years, the potential for the development of the stock exchange in Albania is increasing. Some companies, mainly financial institutions, have successfully applied bond issuance through private placement. The opening of the stock exchange will provide an opportunity for bonds and new shares of commercial companies to be also issued with public offering. The public offering will provide a fair quoting price of issuing and the continuous secondary trading of these securities.

The stock exchange will also provide to businesses the opportunity to raise capital through issuance of new shares. For the wide public, securities of private firms create new investment alternatives and high return on their investments.

Source: PARAJA.NET

SeeNews 

This news is available in Albanian only. To see the Albanian version click here.

Source: Albanian Financial Supervisory Authority (AFSA)

Treasury bills’ interests in the primary market are growing even during June. At Tuesday’s auction, 12-month maturity bills recorded a weighted average interest rate of 1.68%, from 1.46% at the previous auction.

After several months of falling interest rates to minimal historical values, May marked a turning point. Increasing interest rate adjustment was expected, given that the decline had reached very low and possibly unforeseen levels. Especially after the Eurobond issue, in October last year, the domestic financial market was even more liquid than usual. This increased competition among investors to buy T-Bills and T-Bonds, in the absence of other financial investment alternatives in local currency.

The interest rates on government debt papers went down unrecorded, but this drop naturally reached a bottom line and interest rates are beginning to move to the most reasonable levels. On the other hand, even the financial market demand to buy bonds has been somewhat reduced in recent auctions. At yesterday’s auction, the value of claims was only slightly higher than the amount of bonds promulgated for sale by the Ministry of Finance.

This indicates that the government securities market may have partially absorbed the excess liquidity created. Despite the interest rates being in a growing adjustment cycle, experts do not expect this growth to be large.

SCAN