Fund managers remain quite cautious

After this morning’s surge in stock prices, the initial gains of the Crobex index on the Zagreb Stock Exchange are gradually melting away due to profit-taking. Currently, the Crobex stands at 2,209 points, which is 0.81 percent higher than Friday’s close.

During the morning, it was up more than 2 percent. By 11:30 AM, around 10 million kuna in turnover was achieved. "This morning, the stock exchange recorded an extremely positive start to trading, mostly driven by optimism regarding the Chinese economic revival program, whose positive effects are spilling over to all global stock exchanges, including our domestic one. However, after that, profit-taking followed, leading to a slight stabilization of prices," emphasize the investment company Erste Securities.

The Chinese government announced yesterday the details of a $586 billion economic stimulus package, which accounts for nearly 18 percent of this year’s Chinese GDP. It includes the construction of roads, airports, and other infrastructure projects, as well as increased subsidies for the poor and farmers. As the shipping sector is the most sensitive to movements in the Chinese economy, today’s clear focus for investors is on the shares of shipping companies, say Erste Securities.

Thus, the most liquid stock is that of Atlantska plovidba, with a turnover of 4.07 million kuna. Its price rose by 6.3 percent to 933 kuna. Following is the stock of T-HT, with a turnover of 1.54 million kuna and a price increase of 1.35 percent to 230.51 kuna. However, the stock of Ina is significantly down. Its price fell by 6.6 percent to 1,725 kuna. So far, it has achieved a turnover of 887 thousand kuna.

"Today’s trading is positively influenced by the rise of global stock indices. However, liquidity is low, and overall activity is weak," points out Zvonimir Marić, a member of the Management Board of K.D. Asset Management. European stock indices are currently up by more than 3.5 percent. On the Tokyo Stock Exchange, the Nikkei index closed the day with a gain of 5.8 percent. As Marić adds, financial reports from companies for the first nine months continue to arrive, but there is a lack of investor reaction to them.

Today, Uljanik Plovidba reported that it achieved a net profit of 62.2 million kuna in the first nine months of this year, which is 75.6 percent less than in the same period last year. According to the Management, the profit is lower compared to the same period in 2007, as significant revenues from ship sales were achieved last year. Total revenues decreased by 50.4 percent to 196.3 million kuna. The price of that stock rose by 2.13 percent to 910 kuna.

Furthermore, Belišće reported that it achieved a net profit of 30.9 million kuna in the first nine months, which is 11.6 percent more than in the same period last year. Belišće’s revenues increased by 5.9 percent to 1.03 billion kuna. The price of that stock is currently down by 1.56 percent to 520.11 kuna, with thin turnover.

Marić expects that the sentiment in the domestic market will continue to be most influenced by movements in global stock markets and anticipates reduced liquidity."If there are no new shocks, I expect that we will enter a period of reduced liquidity in the coming days. Namely, fund managers remain quite cautious, so I do not believe they will increase positions in stocks now. It is really difficult at this moment to predict in which direction global markets will move further. And the domestic market continues to suffer from a chronic lack of liquidity and expectations of slowing economic activity," emphasizes Marić.

* The shares of Atlantska plovidba are in the portfolio of Erste Securities Zagreb d.o.o. and/or in the composition of portfolios managed by Erste Securities Zagreb d.o.o.