Domestic companies fill their treasuries with their own shares

At the Zagreb Stock Exchange today, most analysts expect stagnation of the Crobex index, following its jump of more than three percent yesterday, and continued low liquidity.

Of the eight analysts who participated in Hina’s survey, five expect stagnation today, two expect an increase, and one expects a decline in the domestic stock market index. The Crobex index rose by 3.42 percent yesterday, to 1,675 points. Regular trading in shares amounted to 24.14 million kuna."While expectations for a new reduction in interest rates in the U.S. intensify on global stock markets, we have been witnessing an increased filling of the treasuries of domestic companies with their own shares for some time now. It is clear that companies conclude that it is a favorable moment for share buybacks as they are undervalued. Therefore, a continuation of the Crobex growth is possible," says Nada Ružić, CEO of Argus Securities.

On Wall Street, leading indices fell on Monday, pulled down by falling stock prices in the financial sector due to investor concerns regarding bank losses in Bernard Madoff’s investment scheme. Asian markets traded very cautiously this morning as the incoming news is not encouraging, and investors are restrained due to the expected decision of the U.S. central bank regarding interest rates. The Nikkei index on the Tokyo Stock Exchange fell by 1.1 percent today. Investors are on alert as U.S. central bank leaders will decide at their meeting today how much to reduce the key interest rate. Analysts expect a reduction in the rate from 1 to 0.50 percent, which would be a record low level of the cost of money in the U.S.

Ružić continues to expect low liquidity in the domestic market, which is now at levels from the years of growth, specifically during 2004 and 2005. At the end of the year, business leaders usually provide the first estimates of total annual business results. Thus, yesterday, the CEO of Atlantska plovidba, Ante Jerković, stated that this year will be the best year in terms of financial results in the history of this Dubrovnik shipping company.

By the end of the year, a profit of over 150 million dollars is expected. At the end of October this year, a profit of 158 million dollars was recorded, of which 151 million dollars was in the maritime sector, but due to the crisis, it is expected that this profit will be somewhat lower by the end of the year, said Jerković. Speaking about forecasts for 2009, the CEO of Atlantska plovidba stated that if freight rates remain at the current level, a loss of 30 million dollars is expected. Regarding investments in fleet renewal, it was highlighted that three new ships are currently being built in Vietnam, and there are plans to build five more large ships.

The president of Petrokemija, Boris Mesarić, emphasized that this company will finish this year, the second in a row, with a positive financial result. Some analysts point out in Hina’s survey that the news that Atlantic Group is entering the wholesale pharmacy business could also attract investor attention. According to Poslovni dnevnik, this company has expanded its activities and is launching its own wholesale pharmacy, which will start operating next year and will serve to market the company’s brands, as well as support the pharmacy chain Farmacia. So far, there is no confirmation of this news from the company. (H)