Both Positive and Negative Scenarios Possible on the ZSE

Analysts are divided today regarding the direction of stock prices on the Zagreb Stock Exchange, which has largely correlated with global markets in recent weeks, given that stock prices on Wall Street fell yesterday, while they rose this morning in Asia.

Of the eight analysts from brokerage firms who participated in Hina’s survey, three expect an increase today and the same number expect a decrease in the Crobex, while two anticipate its stagnation. The Crobex index closed trading yesterday at 2,162 points, što je samo 0,41 posto više nego dan ranije. At the beginning of yesterday’s trading, it was up by more than šest posto, but gains in stock prices melted away as the day progressed. Regular trading volume amounted to 68.4 million kuna.

"Given that after the interest rate cuts in the U.S., some indices on Wall Street fell, while Asian markets achieved strong gains, I believe that both positive and negative scenarios are possible on the domestic market today," says Damir Bićanić, Deputy Executive Director of Investment Banking at Hypo Alpe Adria Bank.

On global markets, investors are focused on the Fed’s reduction of key interest rates by half a percentage point. Despite this, stock prices on Wall Street fell on Wednesday, as forced sales by investment and hedge funds continued, as well as profit-taking sales that investors opted for after a strong price increase the day before. However, stock prices in Asian markets jumped sharply this morning, rising more than 10 percent in Japan, Hong Kong, and South Korea.

Bićanić believes that in the short term, significant volatility should still be expected, but that markets will stabilize in the medium term, as governments around the world are creating conditions for sustainable growth."We are witnessing synchronized moves by governments and central banks worldwide that are creating conditions for economic growth in the medium term, under somewhat changed circumstances. For example, inflation is now decreasing, which allows monetary authorities to further lower interest rates, and this should enable an increase in liquidity. We must wait for a change in psychology among market participants and the return of their confidence," explains Bićanić.

He also believes that the pressure for a correction in stock prices on global markets is gradually decreasing. "If we account for the recession, stock prices have already fallen significantly everywhere, and exits from hedge funds should stop by mid-November due to the expiration of the so-called ‘redemption window’, so the situation on the markets should stabilize from that side as well," says Bićanić. In recent days, however, liquidity on the domestic market has gradually decreased."This has nothing to do with it; the important thing is the average market liquidity, which is gradually increasing," concludes Bićanić.(H)