2008: A Year of Negative Records on the ZSE

After several years of breaking positive records, the year 2008 in the Croatian capital market will be remembered for its first negative records, as well as for the first ‘lessons’ about stock trading in practice learned by thousands of small investors, as well as some large ones.

Thus, in the preliminary annual trading data for the Zagreb Stock Exchange in 2008, it is almost impossible to find a positive indicator, from market liquidity indicators to the price of each individual stock. For example, the total turnover this year (as of December 18) amounted to 30.5 billion kuna, which is almost 55 percent lower than in 2007, with regular turnover being 25 percent lower than last year, amounting to just over 17 billion kuna. An even more significant decline is noticeable in the value of stocks.

The Crobex index, as an indicator of the average price movement of the 30 most liquid stocks on the Zagreb Stock Exchange, lost almost 67 percent of its value this year, after rising by 63 percent in 2007. The Exchange’s data show that during 2008, its value fluctuated by almost 270 percent – the highest level was reached in January, during trading on January 4, amounting to 5,292 points, while the lowest was recorded on December 2, when during morning trading, Crobex fell to just 1,430 points, the lowest since the end of 2004. This also indicates that only a few stocks will finish this year with a price in the positive. Namely, the prices of the ten most liquid stocks in 2008 decreased in the range of 40 to almost 80 percent, and among the 50 most liquid, there are no stocks with an annual price increase.

In addition to directly affecting investors’ earnings on the Exchange, this decline in the value of Croatian securities also had a strong indirect impact, for example on the returns of pension and investment funds, which experienced a significant outflow of managed assets due to reduced returns. Significant price reductions were not spared even for ‘people’s’ stocks, those in which the largest number of small investors, citizens, invested, namely the stocks of HT and Ina, which were also the most liquid stocks in 2008. The HT stock ended 2008 with a price drop of over 44 percent, with more than 2.3 billion kuna in turnover.

The price of the Ina stock, despite the increase it achieved before the takeover process by MOL, is almost 55 percent lower than at the end of last year. This stock achieved almost 1.8 billion kuna in turnover, and investor interest in it was most intense precisely in anticipation of the takeover. Even more intense negative movements are observed in sectors that have brought multiple returns to their investors in recent years – construction and shipping.

The stock of Atlantska plovidba, which ranked third in turnover with almost 1.6 billion kuna, is 80 percent lower at the end of this year than in 2007, and similar declines are recorded for the stocks of other shipping companies – Uljanik plovidba (82 percent), Jadroplov (80 percent), and Tankerska plovidba (80 percent). In construction, the stock with the largest annual price drop is the stock of Viadukt, whose price has decreased by 92 percent. Among the remaining construction companies, this decline ranges from about 60 percent (Industrogradnja) to almost 90 percent (Hidroelektra-niskogradnja, Tehnika, Montmontaža).  (H)