NEEDS AND POSSIBILITIES FOR ENHANCEMENT OF SERBIAN FINANCIAL MARKETS

The chapter analyses Serbian financial markets: capital market, money market and foreign exchange market. Market fall of 26% was determined during 2011 compared to the record breaking 2008, despite a visible recovery after 2009 and 2010. Foreign exchange market has dominated with the average 62% of market share, money (repo) market is significantly less (35%), while the capital share is minor (3%). Government debt securities (2/3) are the dominant segment on the capital market in Serbia. Shares make the rest of this market (1/3), because there weren’t any corporate debt securities. Turnover decreased for over 70 percent for both BELEX indices, while the whole capital market has notably recovered thanks to an extensive borrowing of the state. However, the turnover on this market was 10 percent less than the GDP. Stock market capitalization has fallen. Systematic risk and market risk significantly rise, measured by the CAPM model. Money market included only the central bank repo securities (repo market). This market dropped on less than 1/3 of the turnover shortly before the economic crisis. Forex market completely recovered after a stumbling fall in the period 2009 - 2010. The final part of this chapter shows a new regulatory framework (Law of Capital Market, 2011). Results of the analysis are summarized in the conclusion and it can be estimated that there are great needs for the enhancement of these markets, but the possibilities for such a development depend mostly on foreign investors.