Stocks with Low Valuations Could Be in Focus

Most analysts expect today at the Zagreb Stock Exchange a continuation of the stagnation of stock prices, and in addition to the most liquid stocks, some stocks that have recorded the lowest levels in the last year and more could also be in focus for investors.

Of the eight analysts from brokerage firms participating in Hina’s survey, six expect stagnation of the Crobex index today, while two expect its decline. The Crobex weakened by 1.24 percent last week, to 3,495 points. It is now below the 50-day, 100-day, and 200-day moving averages and has been in a downward trend since the beginning of this year, suggesting a continuation of negative trends, with still low liquidity, say the Economic Research Department of Hypo Alpe Adria Bank.

Regular trading in stocks amounted to about 195 million kuna, which is 48 percent more than a week earlier, but block transactions accounted for 35 percent of that. “Last week marked an increase in liquidity on the exchange, but also a further decline in the Crobex. At the same time, there was a slightly higher institutional and block trading with certain stocks that recorded the lowest price in the last year, during which we witnessed, in brokerage jargon, their ‘bounces’,” says Žaran Perić, an investment advisor at the Karlovac brokerage firm EA Sistem.

He explains that the prices of certain stocks, primarily Đuro Đaković Holding, Viaduct, and AD Plastika, jumped by more than 10 percent after touching the lowest levels in the last year. “Similar could happen with other stocks. It seems that investors have assessed that their prices have fallen to sufficiently low levels, so they might decide to buy them. Therefore, today I expect a slight increase in stock prices and the Crobex,” says Perić.

Hina’s survey shows that the greatest interest from investors could still be only in the most liquid issues – the stock of Ina, T-HT, and certain construction and shipping companies. The Baltic Dry Index (BDI) weakened by 4.7 percent last week, to 6,809 points. Most analysts in the survey state that stock prices will stagnate until the announcement of the public offer by MOL for Ina’s shares. Only that, they believe, could serve as a catalyst for greater investor activity.

Last week, the most liquid stock was that of Kutina’s Petrokemija, with a turnover of 30.1 million kuna and a price increase of 3.65 percent, to 249.93 kuna. As Perić points out, the increased interest from investors in that stock is also a result of the fact that there is high demand for mineral fertilizers in the global market. According to Perić, the stock of Dioki could continue to attract investor attention as the government is expected to determine the exact location for the construction of the LNG terminal in the coming days. Two locations are in play – Plomin and Omišalj.

The stock of Dioki, which owns land near Omišalj, rose by almost 20 percent last week. And although the General Assembly of Shareholders of Đuro Đaković Holding decided last week to announce a tender for the privatization of 50 percent plus one share of Đuro Đaković Montaža, for which a consortium of IGH, Konstruktora, and Dalekovod is mentioned as a buyer, since the shares of that company are in a special trading regime, Perić does not expect higher trading volume with it.  (H)