EME Stock Exchanges: Robinhoods, “new” economy, and index wars (MOEX, GPW, ASE, BVB, ZSE)
We believe that COVID-19 has changed the global stock markets irreversibly. First, the “new” economy, high-tech, epidemic-resilient stocks have become the highly desired asset class. Second, the record-low (and potentially long-lasting) interest rate environment has channelled retail money from the banking sector into higher yielding assets (mainly equities). Not surprisingly, the stock exchanges have outperformed the banks and insurers in the COVID-19 era. However, exchanges tend to be the fastest-growing financial names in the long term as well, but they are not homogeneous, as they vary in terms of business models, asset classes and market classifications. Nonetheless, they are all subject to the same global trends: the increasing role of the “new” economy stocks and ETFs; and the growing weight of China in the EM universe. In this report, we have analysed five listed exchanges in EME, to discover the value still hidden there. Our top pick is Moscow Exchange (MOEX; BUY, price target (PT) RUB 166/share) as, on our estimates, it has the highest dividend yield (7%), a solid earnings growth profile (a 2019-22E EPS CAGR of 9%) and liquidity (3M ADTV at USD 23m), and the most diversified revenues of the five stocks in this report.The Hellenic Exchanges is engaged in the following business sectors: trading, clearing, settlement, data feed, IT, exchange services, depository services, clearinghouse services, and other.
Moskovskaya Birzha MMVB-RTS PAO. Moskovskaya Birzha MMVB-RTS PAO (MMVB-RTS OAO) is a Russia-based integrated stock exchange that provides electronic trade organization, clearing and settlements on trades, depository and information services. The Company provides trading and settlement services in such segments of the financial market as foreign exchange (FX) market, federal bonds market, market of derivative financial instruments, cash equities market, corporate and regional fixed income market, commodities market, as well as market for state and municipal orders. The Company was established as a result of the merger between MMVB ZAO and RTS OAO. It operates through six branches and three representative offices. As of February 27, 2013, the Company's major shareholder was the Central bank of the Russian Federation with a stake of 22.47%. In January 24, 2014, the Company sold its whole stake in MMVB-IT ZAO.
Gielda Papierow Wartosciowych w Warszawie SA (Warsaw Stock Exchange, GPW) is a Poland-based stock exchange. It is a parent entity of WSE Group that offers products and services within its trading markets of equity, derivate, fixed income and structured products. It also distributes market data. The Company has two business lines: Financial market, which includes trading in equities, derivatives, fixed-income and other instruments, listing, and information services; and Commodity market, which includes trading in electricity and property rights in certificates of origin, operation of a register of certificates of origin, clearing, trade and technical trade operator services. As of December 31, 2011, it operates two wholly owned subsidiaries, WSEInfoEngine SA, providing data transmission and information services; and Instytut Rynku Kapitalowego WSE Research SA, engaged in publishing; as well as 92.47%-owned BondSpot SA.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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