Capital Markets: Market Indicators

A market indicator is a change in market capitalization compared to its value calculated upon market closing on the previous trading day. The algorithm for indicator calculation ignores changes in market capitalization due to securities' inclusion in or exclusion from the trading system on the previous trading day. Stock exchange indexes are very important indicators in capital markets. They are price indexes of shares issued by enterprises whose shares are traded on the stock market. Indexes show the share supply and demand relationship for a given day. If share prices grow (demand is greater), it will have positive effects on the stock exchange index - the index grows, and vice versa.

There are a few indexes on the BiH stock exchanges, the most important on the Sarajevo Stock Exchange (SASE) being the SASX-10, SASX-30, and BIFX, while those on the Banja Luka Stock Exchange (BLSE) are the BIRS, ERS10, and FIRS.

The Sarajevo Stock Exchange 10 - SASX-10 is a benchmark index that tracks price trends for the leading ten companies on the market (without investment funds) measured by market capitalization and trading frequency. SASX is a price weighted index, with the issuer's market capitalization used as a weight. No single issuer can account for more than 20%. The base date of the index is December 31^st, 2004. The base value the index had at the time was 1,000.00 index points.

The Sarajevo Stock Exchange Index 30 - SASX-30 is a price index, i.e. paid dividends are not taken into account in calculating the index. It is also a benchmark index aimed at allowing investors and analysts to assess general trends in the most liquid part of the SASE free market - the securities stock market. The SASX-30 is an equally weighted index, where each participant has the same influence on the index trend, regardless of the market capitalization of an individual issuer. The SASX-30 includes only the symbols of issuers included in the primary free market. The base value of the SASX-30 index is 1,000.00 index points. The index base date is March 31^st, 2009.

The Bosnian Investment Fund Index - the BIFX is a benchmark index of the SASE that tracks the price trends of investment funds included in the SASE market. The BIFX is a price weighted index, using fund market capitalization as the weight. The maximum participation of an individual fund is not limited. The index base date is May 28^th, 2002. The base value the index had at the time was 1,000.00 index points.

A regular semi-annual index revision is conducted, so as to be implemented on the first day of trading according to the new composition of the primary free market.

The RS Stock Exchange Index  - the BIRS is also a price index, i.e. paid dividends are not taken into account in calculating the index. The BIRS is a weighted index, determined by the issuer's market capitalization. The market capitalization includes common free-floated shares. A single issuer or a number of related issuers cannot account for more than 20%. The BIRS can include shares from five to thirty issuers. It may include the shares of issuers who meet the general conditions for inclusion, other than investment funds. The index base date is May 1^st, 2004 and its base value was 1,000.00 index points.

The Elektroprivreda (Electricity Company) of the Republika Srpska index - The ERS 10 - is another price index. It is also a weighted index, determined by the issuer's market capitalization. It includes ten enterprises, i.e. five for electric energy distribution, three hydroelectric plants, and two mines and steam power plants. The base value of the ERS10 index is 1,000.00 index points, and its base date was January 1^st, 2006.

The RS Investment Funds Index - the FIRS is a weighted index, the weights determined by market capitalization. It is also a price index. The number of investment funds whose shares are included in the FIRS depends on the number of investment funds whose shares are included on the official stock exchange and on meeting the FIRS conditions. The index base date is August 1^st, 2004. Its base value was 1,000.00 index points.

Regular revisions are performed twice a year on the BLSE, on the last day of the third week in May and November. The revision is made based on the data on stock exchange trades for the six-month period ending on the last day of the month preceding the revision.