Shipping prices are rising, while the construction sector is becoming cheaper

Investor caution on the Zagreb Stock Exchange resulted in low trading volumes and a slight increase in the Crobex index last week, with shares of Slatinska banka, Pliva, and Jadranski naftovod being in greater focus, in addition to the usually most liquid stocks.

The Crobex index reached 1,692 points on Friday, što is 0.61 percent higher than a week earlier. The regular trading volume amounted to 134.11 million kuna. Although the achieved turnover is 50 percent higher than the previous week, excluding occasional larger transactions in otherwise less liquid stocks such as Slatinska banka, which had a turnover of just over 25 million kuna, and Pliva, 4.5 million kuna, the trading volume remains very low. As analysts point out, investors remain cautious and are awaiting developments in the global and domestic economy.

The most liquid stock was T-HT, with a turnover of 23.12 million kuna. Its price rose slightly by 0.23 percent to 221.5 kuna. Following with a turnover of 20.3 million kuna is the stock of Atlantska plovidba. Its price strengthened by 6.24 percent to 817 kuna. The largest impact on the price increase of Atlantska plovidba’s stock was the management’s decision to cancel orders for three new vessels in Chinese and Korean shipyards, significantly reducing the investments of that shipping company, notes Goran Nimac, an analyst in the Economic Research department of Hypo Alpe Adria Bank.

"With this move, the company’s management is implementing an appropriate risk management policy, što is extremely important in the current conditions of difficult financing. The latest management decision becomes even more significant when considering the ratio of net debt to the value of Atlantska plovidba’s fleet of 66 percent at the end of Q3 2008 and the fact that many global banks do not allow shipping companies to exceed that ratio of 70 percent in their credit collateral," emphasizes Nimac.

The entire shipping sector also recorded gains last week, primarily due to a strong increase in the dry bulk freight index BDI by almost 53 percent to 1,642 points. The strong rise in freight rates is a result of slightly higher demand from China for raw materials due to stock replenishment. However, as analysts point out, it is still too early to talk about a recovery in the global shipping market. The stock of Jadroplov increased by 4.16 percent, Tankerska plovidba by 2.18, and Uljanik plovidba by 1.17 percent.

Last week, the stock of Jadranski naftovod (JANAF) also attracted greater investor interest, with a turnover of 1.9 million kuna. Its price rose by more than 60 percent to 1,842 kuna. "The stock of Janafa attracted greater attention from investors primarily due to the announced recapitalization and the management’s announcement of better-than-expected business results in the previous year. The funds from the recapitalization are intended to finance part of the planned new three-year investment cycle of 1.9 billion kuna, primarily aimed at increasing storage capacities, which could significantly contribute to improving the company’s operational profitability in the coming years," notes Nimac.

Last week, the construction sector came under pressure, primarily due to the failure of the first round of recapitalization of Ingra, and disagreements regarding the takeover and payment of Arena’s costs between Ingra and Zagrebački holding. The stock of Ingra decreased by 7.25 percent to 66.5 kuna. Other most liquid stocks in that sector recorded more moderate losses, with IGH’s stock weakening by 1.97 percent to 3,039 kuna, and Dalekovod’s stock by 1.9 percent to 353.18 kuna. As analysts point out, the construction sector will increasingly feel the impact of the financial crisis in the future, primarily through liquidity issues. "In the coming week, we can still expect low liquidity on the ZSE, with investors focusing on movements in global markets," concludes Nimac. (H)