Investing in Serbia

Introduction

Serbia is a European country with an upper-middle income economy. It had one of the fastest growing economies of its region, in terms of GDP growth rates prior to the global recession, and attracted solid foreign direct investment.

Serbia’s Main Industries

Serbia is economically known for its strength in:

1. Agriculture Sector
   1. Fruits
   2. Vegetables
   3. Live cattle
2. Mining and Metals Sector
   1. Iron
   2. Steel
   3. Non-ferrous metals
3. Industrial and Manufacturing Sector
   1. Metal processing
   2. Machinery
   3. Mechanical and household appliance production
   4. Consumer electronics
   5. Food Processing
   6. Textiles and Footwear
4. Forestry Sector
   1. Timber
   2. Wood
5. Natural Resources
   1. Oil
   2. Coal
   3. Copper
   4. Lead
   5. Zinc
   6. Bauxite
   7. Iron Ore

Serbia’s Main Stock Exchanges

The main stock exchange in Serbia is the Belgrade Stock Exchange (BELEX)

• Founded in 1894
• In 2004 became a member of the Federation of Euro-Asian Stock Exchanges
• Trading mainly occurs in equities and debt of listed Serbian companies. Future plans are underway to include other instruments such as rights, warrants, and derivatives
• Serbia’s Main Index is the BELEX 15 – consists of Serbia’s 15 most heavily traded listed companies

Glimpse into Serbia’s Equity Market

After experiencing significant negative impacts from the global recession, and performing quite poorly between 2008 and 2009, Serbian equities have rebounded in 2011 with a promising outlook for the near-term.
However, the Serbian stock exchange is not very liquid, which adds to its risk. As such, the good performance could be largely liquidity-driven and investors remain cautious. The Belex 15 stock index has increased around 15% since the beginning of 2011, with its energy stocks performing particularly well.

Serbia’s Top 10 Companies

Rank Company Profit 2009 (Euro) Revenue 2009 (Eur) Revenue Growth (YoY)

1. Naftna Industrija Srbije AD -393,851,753 -92,165,916 -27.14%
2. JP Elektroprivreda Srbije -144,741 -24,991,065 4.65%
3. Telekom Srbija AD 162,153,620 62,646,388 1.63%
4. JP Srbijagas 9,873,843 3,397,005 -4.78%
5. Delta Maxi DOO 18,989,256 18,560,216 8.65%
6. Termoelektrane Nikola Tesla DOO -17,739,454 -97,846,294 5.48%
7. U.S. Steel Serbia DOO -153,051,128 4,914,422 -44.37%
8. Mercator – S DOO 12,071,671 -4,259,543 318.49%
9. Elektrovojvodina DOO -6,931,560 -8,322,647 2.99%
10. YugoRosGaz AD 13,715,564 23,495,704 -32.94%

Ways to Invest in Serbia

There are a couple of different ways to invest in Serbian companies:

1. Through a bank in Serbia
   1. AIK Banka
   2. Banca Intesa Beograd
   3. OTP Banka Srbija
   4. Alpha Bank Beograd
   5. Piraeus Bank
   6. Raiffeisenbank Beograd
   7. Volksbank Beograd
2. ETFs with some exposure to Serbia
   1. ESR:NYSEArca– seeks to track the MSCI Emerging Markets Eastern European Index Fund
   2. GUR:NYSEArca – SPDR S&P Emerging Europe ETF