Two new companies, Autowallis and 4iG made it to the Premium category. The Standard category grew also thanks to the entry of MKB Bank, one of the major players of the Hungarian financial market. BSE Xtend, the market specialised for medium-sized companies, also welcomed new issuers: CyBERG and GOPD, and the end of the year saw the registration of DM-KER shares.
The corporate bond market had an especially strong year, not only in terms of the BSE but also in terms of the entire Hungarian economy. Magyar Nemzeti Bank launched the Bond for Growth Scheme on 1 July with the main goal to improve monetary transmission and, subject to this, the access of companies in Hungarian ownership to the capital market. Accordingly, the Budapest Stock Exchange set up the BSE Xbond market for companies planning to issue bonds to let companies enter the public market with less tough conditions. We established Első Értékpapírosítási Tanácsadó Zrt. which makes bond financing more accessible not only to corporations but also to small and medium-sized enterprises.
Efficiencies of scale could make securitisation more attractive to these companies to individual corporate bond issuances, and ELÉT will assist in this by acting as some kind of knowledge centre.
Small and medium-sized enterprises are the backbone of the Hungarian economy; their growth opportunities are, therefore, important. Capital market financing and listing on the exchange could offer real alternatives, because they do not only assist in securing extra capital but also support the prestige, going international of the companies involved as well as the trust of their clients and customers. The BSE50 publication is, among others, to plant this thought deeper by presenting another 50 inspiring medium-sized enterprises in its issue of this year, the fourth one. With this year’s publication, we have told 200 exciting company histories so far, which clearly proves that Hungary has a lot of successful and IPO-ready companies. Every year, by tradition, the publication is first presented publicly at the BSE50 Conference, which was a memorable and colourful one in 2019 as well, thanks not only to the talks of key Hungarian capital market players but also its international guests.
It is important that we can offer the right service package to IPO-aspiring companies. Our business development chain became more profound and new opportunities came up for the companies and investors.
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19 companies, more than in 2017 and 2018 together, joined our international company development training, the ELITE Programme, in 2019. The BSE Mentoring Programme, which is for financing the going public of companies, assisted two companies in 2019, DM-KER Zrt. and Gloster Infokommunikációs Zrt. The National Stock Exchange Development Fund is still available for facilitating capital increases and the preparation for the stock exchange, and our agreement made with Hiventures Kockázati Tőkealap-kezelő last autumn adds further services to the portfolio of business development services and also sets the path for further improvement of the flow of capital.
Thanks to the big success, our analytical/market-making programme grew further, and in addition to the 11 medium-sized shares the programme has had so far, 3 new shares, AutoWallis, OPUS Global and Waberer’s, will also be regularly analysed from July 2019. Experience so far shows that the programme has an extraordinarily positive effect, the turnover of these shares increased by 20% on average during the one-year test period.
Thanks to the big success, our analytical/market-making programme grew further, and in addition to the 11 medium-sized shares the programme has had so far, 3 new shares, AutoWallis, OPUS Global and Waberer’s, will also be regularly analysed from July 2019. Experience so far shows that the programme has an extraordinarily positive effect, the turnover of these shares increased by 20% on average during the one-year test period.
As for ownership structure, about 65% of the market belongs to foreign institutional investors. The picture is more balanced in terms of daily turnover, half of which comes from foreign investors, and the other half comes from Hungarian institutional and retail investors. The activity and financial awareness of the latter group, i.e. retail investors, is becoming increasingly apparent. The direct retail stock portfolio is about HUF 750 billion, which is an all-time high. Given the fact that the value of net financial assets exceeds HUF 50 billion, we still see a lot of growth potential in this field.
We did our best to further strengthen households' confidence in stock investments through our education activities in 2019 and held the BSE Academy event series in cooperation with the major players of the Hungarian capital market. Our subsidiary, the Budapest Institute of Banking, has become a major player on the Hungarian financial education market in terms of courses taught and the numbers of teachers and students.
We attached great importance to the involvement of younger generations: this years BSE Stock Derby Competition, which is organised in collaboration with the Money Compass Foundation, had over 1800 participants. The stock exchange game for secondary school students, which is organised in collaboration with the Central European Training Centre, also attracted a lot of interest. University students could compete for the highly prestigious Kochmeister Prize at the Investment Research Challenge of the CFA Institute and the CFA Society Hungary. The free-of-charge stock exchange visits for school groups also continued and were still one of the most useful tools to present the world of the stock exchange.
Our international relations also became stronger. In April, we hosted the V4+CEE Capital Market Conference where the stock exchanges of the V4 countries and the stock exchange leaders of Slovenia and Bulgaria could discuss the potentials hidden in the region’s capital markets, stock exchanges and its listed companies.
We visited China in June on account of the first Hungarian Investor Day. The Shanghai Conference was a great opportunity to deepen the capital market cooperation of Hungary and China started in 2017. We further strengthened this goal with the agreement concluded with the Shenzhen Stock Exchange in September to facilitate the approximation between the platforms of the two parties.
September also saw an important development that also affects the Central Eastern European region. CEEplus, the combined stock index of the V4, Croatian, Romanian and Slovenian stock indexes, was launched to open roads to regional investments for further international and Hungarian institutions and households.
2019 was the year of momentum. We advanced in all aspects and got closer to accomplishing the strategic goals for the 2016-2020 period. This publication provides a deeper insight into what happened on the Hungarian capital market in the past year and provides an outlook for the next year for capital market players, legislators and individuals interested in the stock exchange.