Postponement of HT Mostar Privatization Raises HT Share Price

The rise of Crobex above 1,800 points, along with low trading volumes, characterizes today’s trading on the Zagreb Stock Exchange, with T-HT shares being the main focus of investors. The Crobex index was at 1,820 points around 14:00, which is 2.62 percent higher than yesterday’s closing.

Regular trading in shares reached 25 million kuna,"Low liquidity continues to characterize the domestic capital market today, and the components of Crobex are mainly in focus for investors," says Dalibor Balgač, an analyst in the Economic Research Department of Hypo Alpe Adria Bank. The T-HT share stands out in terms of liquidity, with nearly eight million kuna traded. Its price is up 5.4 percent, at 219.5 kuna. "The trigger for increased trading in this share is the news about the postponement of the privatization of HT Mostar," Balgač believes. Namely, as he points out, the investment public has been discussing the need to restructure T-HT’s balance sheet for some time, with three models potentially applicable – payment of an extraordinary dividend, purchase of treasury shares, or a new acquisition.

"If we exclude, at least for now, the acquisition of HT Mostar, two possible ways remain to resolve the enormous cash position of that company, both of which positively affect the price of T-HT shares," explains Balgač. The shares of Atlantska plovidba are again in greater focus for investors, with more than four million kuna in trading. Its price is up 5.22 percent, amounting to 776 kuna. According to Balgač, there is noticeable increased demand for the transportation of coal and iron ore in the bulk shipping sector.

"The higher demand for coal transportation is a consequence of the winter period and low air temperatures. Furthermore, iron ore stocks in major Chinese ports fell last December from a record 77 to 62 million tons, prompting Chinese companies to increase their activity around replenishing them," emphasizes Balgač. However, he adds that it is too early to talk about a trend reversal in that market, as the macroeconomic climate is still not improving.

"The shipping sector will experience significant volatility this year – with every activity such as replenishing iron ore stocks in China or coal in Europe and the USA, freight rates will rise, and consequently, the share prices of shipping companies. However, freight rates are still too low for these companies to be profitable," assesses Balgač. Most of the other less liquid shares are also recording price jumps today, with Dalekovod shares standing out, rising by 4.5 percent to 421 kuna.

A short-term market direction today should be provided by the unemployment data in the USA for December. This data is crucial for investors as it reflects everything – from business activities to patterns of personal consumption in the largest economy in the world. They estimate that the US economy lost more than half a million jobs in December last year, so the total number of lost jobs in 2008 could reach 2.4 million – the highest since World War II.

Balgač assesses that capital markets in this region have somewhat stabilized and that major sell-offs are behind us, but that trading will now be characterized by high volatility. "The next factor that will have a significant impact on investor sentiment will be the arrival of the first business reports from companies in Europe and the USA for the last quarter of last year, which, judging by the announcements of layoffs and reduced expected revenues, could be disappointing," concludes Balgač. (H)

* Employees of the Economic Research Department of HAAB and their family members have an ownership interest in the shares of T-HT and Atlantska plovidba.