The biggest risk for the domestic market is the exit of small investors from funds

Most analysts expect today on the Zagreb Stock Exchange a calming of large stock sales, which have dropped the Crobex by as much as 4.5 percent in the past three days, and a recovery of prices for those stocks that have been most corrected.

Of the eight analysts who participated in Hina’s survey, five expect an increase in the Crobex today, while three expect its stagnation. The Crobex index fell by 2.39 percent yesterday, to 3,310 points, a new lowest level since April 14. Regular trading in shares amounted to 78.8 million kuna. "If the large sell-offs by institutional investors calm down, I expect stagnation today, and possibly a recovery in stock prices. After larger trades and a sharp drop in prices, a short pause may follow," emphasizes Dalibor Balgač, investment advisor at Abacus brokers.

As he adds, large sales in recent days culminated after chronically low liquidity in the domestic market over the past few weeks. "There is great nervousness among investors due to prolonged low liquidity in the market, negative news from global markets related to the financial industry, but also regarding the takeover of Ina. Namely, investors are troubled by whether they will be able to achieve a higher price for Ina’s stock than the one offered by Mol in the public offer," assesses Balgač.

However, one of the biggest risks for the domestic market in the medium term is the exit of small investors from funds and how much they can withstand, believes Balgač. The latest data from the Croatian Financial Services Supervisory Agency (HANFA) shows a new decline in net assets under management of open investment funds in August this year by 2.93 percent, to 17.62 billion kuna. Their assets are at the lowest level since the end of 2006.

"However, if we did not have such a developed fund industry, due to great uncertainties in the global economy, stock prices in the domestic market would be at even lower levels. The fund industry somewhat stabilizes the situation on the stock exchange," says Balgač. In focus for investors, as in previous days, the most liquid stocks are expected to be, such as Ina and T-HT, or those stocks that have suffered the sharpest price corrections in the past three days, analysts say. They also estimate that there could be a calming of sales due to margin calls.

In recent days, there has also been more trading in the shares of Mlinar and Žitnjak, as arbitrages are being made between their current price and the price offered by Agrokor in its takeover bid, notes Balgač. The Baltic Dry Index (BDI) fell by 2.65 percent yesterday, to 4,893 points, and is at its lowest level since the beginning of the year."The prices of futures contracts for shipping rose yesterday for the first time in about ten days, while spot freight rates are slowing their decline, so it is estimated that freight rates in the global market are close to their lowest levels," says Balgač. He adds that in the last two days, shares of shipping companies worldwide have also recovered, increasing by between 10 and 15 percent.  (H)