Financial results, positive trend, new subsidiary
At the annual general meeting of the Budapest Stock Exchange (BSE) held on Wednesday, the owners approved the report for the 2017 business year, along with the reports of the Supervisory Board and the Auditor. According to the annual report, the BSE’s EBITDA for 2017 was HUF 465.9 million, while its after-tax profit amounted to HUF 176.3 million. Based on a General Meeting resolution, the company will not pay dividends. The profit for 2017 will be used as a profit reserve in order to continue the market-development strategy.
In addition, a resolution was passed on the remuneration provided to the Auditor for the audits to be conducted in the 2018–2020 period.
In addition to the financial results, Richárd Végh, Chairman-CEO of the BSE, also talked about the achievements to date under the 2016-2020 stock exchange development strategy. The positive trend that started in 2016 continued through 2017: two domestic companies listed their shares on the BSE as part of public offerings. In the first quarter, following technical listing, trading of shares in UBM Holding Nyrt. started, followed by the largest Hungarian IPO of the past two decades in the summer of 2017. Following a successful initial public offering of HUF 15.5 billion, trading of WABERER'S Nyrt. shares commenced on 6 July 2017 in the BSE’s Premium Equities category. The increase in equity market volume was also supported in 2017 by private capital increases, as a part of which seven companies issued and listed shares on the BSE at a total value of HUF 5.3 billion.
During the year, the investment units of 19 closed-end investment funds were listed on the BSE. The average volume of closed-end funds was HUF 316 billion in 2017. In the debt securities market, the listed volume of government securities exceeded HUF 16,553 billion by the end of the year. In the case of mortgage bonds, thanks to the favourable market environment, the number of listings increased by 31%, while new volume listed increased by 96% in 2017 to HUF 244.5 billion. As a result, the average volume of mortgage bonds increased by 38.6% to HUF 728 billion. The volume of listings in the corporate bond market increased substantially, by 55.8% to HUF 154.4 billion.
Beyond the above results, as another huge step forward, in 2017 the BSE launched its educational subsidiary, the Budapest Institute of Banking (BIB), which provides high quality, practice-oriented training to the financial professionals of the future.
The fact that the government supports and pays particular attention to developing the domestic capital market to achieve sustainable economic growth and innovation is an important message to economic players. The state can contribute to the development of the stock exchange in many forms; and this support is essential to achieving success in the long-term. In 2017, the ongoing support by the government and market players again contributed to the implementation of the BSE’s stock exchange development strategy, which continues to progress.
Outstanding performances in 2017: Indices and important stocks
The key BSE indices and the performance of key stocks were also presented. The results were phenomenal: the BUX index rose by 34% in 2016 and another 23% in 2017, which is outstanding performance by both regional and global standards. The index broke historical records on multiple occasions in 2017, as did the BUMIX, which rose 122% last year.
Stock turnover and capitalisation also grew. In 2017, the capitalisation of equities listed in Budapest increased by 23.5% over the previous year to HUF 8,169 billion. Thanks to the positive market mood and positive news related to smaller equities, the shares of ten small-cap companies listed on either the Premium or the Standard market multiplied in value. As another important development, the concentration of stock-market turnover decreased, as the share in turnover of the four blue-chip companies dropped from 98% to 87%, primarily due to the gaining of ground of smaller equities.
The capitalisation-to-GDP ratio was 22.2% in 2017, 3.5% higher than in the previous year (2015: 14.90%; 2016: 18.7%).
In good news for investors, the total dividend amount paid by blue chip companies to shareholders will be 23.8% higher than in 2017.
Outlook on key projects for 2018: Giving medium-size companies a competitive edge
In the spirit of establishing a diversified issuer structure, by launching a new market, Xtend, the BSE opened towards medium-sized businesses that are now assisted in going public by 16 Nominated Advisors (NOMADs). New equity issuers are expected to go public on Xtend during 2018. SMEs well-prepared for the period of public capital market funding will have a serious edge in competition. They are assisted by the BSE’s ELITE Programme and by the National Stock Exchange Development Fund, whose HUF 13 billion capital will help the listing of 5-6 companies per year. The BSE’s Mentoring Programme, thanks to the support agreement concluded with the Ministry for National Economy (NGM), provides assistance to domestic SMEs in both their preparations for and in their actual listing on the Exchange.
“We are developing the stock exchange, strengthening the economy”, said BSE Chairman & CEO Richárd Végh at the general meeting. He went on to add that “The main goal of the BSE’s five-year strategy is to have Hungarian-owned companies list on the capital market in greater numbers, thus having domestic savings take a greater share in the success of Hungarian companies. We have launched numerous new services in the interest of enabling small and medium-sized businesses to list on the Exchange, to be able to successfully advance to the next level."