bg asset management before & after · bg asset management before & after 19 may 2011...
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BG Asset Management Before & After
19 May 2011
Vienna
BG Capital Market - Brief History
The first stock exchange is founded on May 1st, 1914 and exist till WWII
1991 the capital market is “revived” and the “First Bulgarian Stock Exchange” (BSE) is
officially registered; number of regional exchanges within next years
1995 the Securities, Stock Exchanges and Investment Companies Act is adopted; a
Securities and Exchange Commission is set up and the regional stock exchanges merge into
“The Bulgarian Stock Exchange” JSC
1996 – the Central Depository starts operating
2000 – the Public Offering of Securities Act replaces the previous law
2003 – the new Financial Supervision Commission takes up its duties
2007 – 85 licensed brokers (34% banks)
2008 – BSE successfully launched the Deutsche Boërse electronic trading system XETRA
2011 – 62 licensed brokers including banks – consolidation to continue
till the end of 2011 – forthcoming privatisation of 51% of BSE, remaining shares belongs
to banks and brokers
Legal framework fully complying with EU Directives and international
standards
Supervision through a single regulatory body - the Financial Supervision
Commission(FSC)
Well functioning co-ordination between the key institutions&:
− Bulgarian Stock Exchange
− Financial Supervision Commission
− Central Depository
− brokers/dealers associations
Modern and efficient infrastructure, fully electronic remote trading, settlement
cycle-T+2
Strict information disclosure rules for the public companies
Legal framework and institutions
Traded instruments
− Equities
− Bonds /Government, municipal, mortgage & corporate/
− Rights
− Compensatory instruments
− Warrants
Trading platform – Xetra /strategic partnership with Deutsche Boerse/
− as of June 16th 2008
− A major step towards creating an international securities market
integrated with leading capital markets
− BSE visibility improvement
Trading on BSE
Capital Market Performance
• Turnover downward trend of the recent years remained unchanged in 2010. • The major reason for the last years’ decrease is the lack of foreign investors, who were a driving force in 2007.
•Market Capitalization is low compared to Western and Eastern Europe. • Structural problems such as the low purchasing power, the small scale companies and the relatively low free float impede possible growth.
Capital Market Performance
ASSET MANAGEMENT Market Overview
Young, inmature and fragmented market Low awarenes
Low penetration
High potential
Local AM AuM as of 31/04/11 – EUR 243mln
About 100 funds in 4 main investment strategies, according to risk exposure
37 licensed asset managers
3 Asset Managers hold more than 50% of the market in 18 mutual funds
Foreign investment funds – distribution Total AuM accumulated in the country – EUR 247 mln as of 31/03/11/
Distributed mainly via the group’s local bank branches
Biggest player – Pioneer Investments through Unicredit Bulbank branches
Other participants – asset management arms of OTP, Raiffeisen, Societe Generale, Piraeus Bank, Eurobank EFG etc.
Assets under management according to fund types (in millions EUR)
Type of Funds
Dec 2007 Dec 2008 Dec 2009 Dec 2010 March 2011
Number
of Funds
Assets under
Management
Number of
Funds
Assets under
Management
Number of
Funds
Assets under
Management
Number of
Funds
Assets under
Management
Number of
Funds
Assets under
Management
Total Investment Funds 176 612 171 233 290 329 342 449.3 375 455
Foreign Investment Funds 108 153.5 87 86.7 197 167.5 244 253.8 276 247.3
Local Investment funds 68 458.9 84 146.3 93 161.6 98 195.6 99 207.4
Source: BNB
Penetration
Bulgaria – the lowest penetration
AuM/GDP per capita (PPP) Sources: IMF, EFAMA
GD
P P
er C
ap
ita (
PP
P) i
n U
SD
Bulgarian Mutual Funds 2005 - 2011
Source: BNB , FSC
Bulgarian Mutual Fund Market 31/04/2011
Source: Data from the Bulgarian Association of Asset Managers and the Bulgarian Stock Exchange
Lack of wide variety of differentt product types (ELANA manages the biggest
product portfolio with 7 funds and individual portfolio management)
Product segmentation attributes
Risk profile – most important
Currency
Geographic coverage – relatively new for the market (mainly BG market;
other emerging markets; only couple with global exposure
Sector funds
The Product Mix – BG asset managers
The Product Mix
Source: Baud, EFM; EFAMA
AuM by product type
Source: Baud, EFM
Equity
Recent Trends in BG AuM (BGN mln) Recent Trends in EU AuM (EUR billions)
Money Market
Bond/ low risk
Balanced
Source: EFAMA
The Client
Source: BNB
*Other financial intermediaries includes PE funds; factoring and lease companies; investment intermediaries; asset managers; etc
No clear cut Private
Banking or Wealth
Management service
No clear understanding
about service coverage
No special products
Low minimum
investment amount that
could not allow service
upscale
Lack of IT solutions
that could support
upscale
Private Banking - Asset Managers
50,000 BGN minimum
investment amount
Personal consultant/ PM direct contact
Individual portfolio
management
Investment advisory
Research and analysis free access
No clear cut Private
Banking or Wealth
Management service
Better understanding of
the scope
There is only one bank
offering specialy designed
products and services for
that segment; premium
service and personal
aproach
Private Banking – the Banks
- 50,000 BGN – 150,000 BGN
minimum investments
- Net income 2,000 BGN +
- Regular monthly inflow
Personal consultant
Privacy
Out of the branch service
Special rates and
conditions
Information about
promotions and new products
Benefit the sinergy of the group
- 20 years of expertise in the areas of asset management; trading on financial
markets; investment banking; business consultancy; real estate investments etc.
- Wide product variety
- Access to all markets
Client centric model
Retail focus
- Well established distribution network with nationwide coverage
- Sustainability and better resistence to market dynamics
Successful partnerships
- Auerbach Grayson
- SAXO Bank
- KBC Asset Management
- MAN
- Local banks and other third party distributors
ELANA Model
Great potential for asset management industry in Bulgaria
Room for know-how import
Need for market consolidation
Main Conclusions
THANK YOU!
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