Due to Global Events, Company Fundamentals Take a Back Seat

Today, the Zagreb Stock Exchange expects a new wave of T-HT shares and Petrokemija shares, so analysts generally anticipate stagnation or a decline in the Crobex index, while global market developments, particularly news about European banks, will remain in focus.

Of the 9 analysts from brokerage firms who participated in Hina’s survey, 5 expect stagnation today, while 4 expect a decline in the Crobex index. The Crobex weakened by 4.3 percent last week, falling below the psychological barrier of 3,000 points, to 2,967 points. Regular trading in shares reached 377.3 million kuna. The theme of liquidity in the interbank money market will dominate global markets again this week. Although the U.S. Congress passed a $700 billion bank bailout bill on Friday, there are still no signs that confidence between banks has returned.

On the other hand, there are several indicators that the credit crisis has spilled over from the U.S. to Europe. Last week, European authorities rescued the British mortgage bank Bradford & Bingley from bankruptcy, followed by the Dutch-Belgian financial group Fortis, and then the Belgian-British group Dexia. Throughout last weekend, German authorities sought a solution to prevent the collapse of the mortgage lender Hypo Real Estate. Problems are emerging at Italy’s second-largest bank, UniCredito, which has announced plans to raise fresh capital.

Last week’s decisions by the U.S. Congress, statements from leaders in the U.S. and Europe regarding market stability and guarantees for citizens’ savings, as well as specific measures being implemented to ensure stability in the financial sector, should influence the calming of the situation on global stock markets this week, believes Kristina Džakula, an investment advisor at the brokerage firm EA Sistem. “However, on the domestic market, the index could be shaken today as a new wave of shares from the leading component of the Crobex – T-HT, as well as shares from Petrokemija, arrives on the market,” Džakula points out.

As of today, current and former employees of Petrokemija can freely dispose of the shares of that company acquired under preferential conditions, reported SDA. Džakula expects somewhat greater pressure to sell those shares in the coming days. “Despite attempts to create stability in global markets, I expect that due to the facts related to the mentioned shares, the Crobex could be in a negative trend on the domestic market,” says Džakula. After the expiration of the public offer from Mol for shares of Ina, there may also be pressure to sell the remaining ‘free float’ shares of Ina, according to some analysts in Hina’s survey.

According to today’s data from the Central Depository Agency, a total of 2,169,882 shares of Ina have been deposited for sale to Mol. Final data on the deposited shares will be known on Thursday. “Aside from being a long-term investment, investors currently have no significant reason to hold that stock. On the buying side, I do not expect higher levels, and any potential larger sale could cause a significant drop in the Crobex,” says Džakula.

Despite a series of news about new contracts for domestic companies, such as last week’s new contract for Dalekovod in Montenegro or Podravka’s acquisition of two brands from Slovenia’s Droga Kolinska, company shares are failing to react positively in these market circumstances. Currently, fundamentals and business news of companies are not in the focus of investors. “At the end of this month and the beginning of next month, we expect the release of financial reports from companies, so perhaps the focus of investors will return to fundamentals,” concludes Džakula. (H)