Zagreb Stock Exchange: A Week Without Inspiration and Significant Activity

Weak trading and the absence of significant investor activity characterized last week’s trading on the Zagreb Stock Exchange, during which the Crobex index plunged to its lowest level since December 2004.

The Crobex index fell by 4.21 percent last week, to 1,540 points. Regular trading in shares amounted to only 157.32 million kuna. Confirmation that the U.S. economy is in recession and a series of data indicating that the situation in the global economy is further deteriorating caused a decline in stock prices on all global exchanges last week. Following significant volatility on Monday, when the Crobex jumped from a four percent loss to a three percent gain, trading for the rest of the week was largely uninspired. It was focused on the most liquid issues, with only 24 shares achieving a million kuna in weekly turnover.

The T-HT share remains the most liquid, with approximately 26.5 million kuna in turnover. Its price fell by 2.04 percent, to 192 kuna.  The Atlantska plovidba share, on the other hand, recorded a turnover of around 16 million kuna. Its price plummeted by 13.08 percent, to 505 kuna.

The rest of the shipping sector also recorded losses, as the Baltic Dry Index (BDI) is at a historically low level, and the outlook for next year is not optimistic – a slowdown in global trade and consequently lower demand for shipping is expected. Thus, the Uljanik plovidba share recorded a price drop of more than 14 percent, Jadroplov by more than 10 percent, and Tankerska plovidba by 3.5 percent.

Uncertainties related to the business and investment environment in the coming year are pressuring the construction sector, which is recording new sharp losses. Thus, the IGH share, the most liquid in that sector, with a turnover of 12.9 million kuna, fell by 11.98 percent last week, to 3,203 kuna. The Dalekovod share suffered a price loss of more than 18 percent, closing the week at 250 kuna. Among the more liquid shares was also the Ingra share, with a price drop of 11.74 percent, to 63.99 kuna.

Among the more liquid issues last week was also the preferred share of Adris, with a turnover of 12.02 million kuna. Its price fell by 5.54 percent, to 185.15 kuna. The Adris Group share came into focus for investors after the news that the government will abandon the tax on risky behavior of smokers amounting to five ‘health kuna’ next year, emphasizes Goran Nimac, an analyst in the Economic Research Department of the Hypo Alpe Adria Group*.

"Such a move by the government is good news for the tobacco business of the Adris Group, as the introduction of such a tax, along with aligning excise duties with European Union standards, would lead to an increase in the retail price of cigarettes by approximately 60 percent on average, which could encourage cigarette smuggling and shift consumers towards cheaper products," Nimac assesses. He also adds that the experiences of new EU member states, such as the Czech Republic and Slovakia, testify that their leading cigarette manufacturers faced significant market share declines and profitability drops due to consumers turning to cheaper brands after excessively raising retail prices and passing the cost increases onto end consumers. Next week, analysts say, global trends will have the most influence on the domestic market.

"During the next week, we can expect continued volatile trading on the stock exchange, with the focus still on trends from global exchanges," concludes Nimac. (Hina)

* Employees of the Economic Research Department of HAAB and their family members have a vested interest in the shares of the Adris Group.