After yesterday’s sharp correction in stock prices, sentiment on the Zagreb Stock Exchange is calming today, allowing Crobex to recover part of its losses. The Crobex index at 1:30 PM stood at 1,606 points, which is 2.53 percent higher than yesterday’s closing.
Regular trading in shares reached 16 million kuna."After yesterday’s sharp correction in stock prices, it was to be expected that the negative sentiment in the domestic market would calm down, especially since the statements from politicians in the last 24 hours, following the initial announcement of the proposed reform of the second pillar of pension insurance, have been reassuring", says Dalibor Balgač, an analyst in the Economic Research Department of Hypo Alpe Adria Group. He adds that investors were concerned yesterday about how the stock exchange could maintain liquidity without the presence of pension funds, which accounted for 63 percent of total trading on the stock market last year.
"In times of global financial crisis and while liquidity on the domestic stock exchange is almost on its knees, the mere thought of excluding pension funds from the stock equation is enough to instill fear among investors", emphasizes Balgač. He notes that any uncertainty and unpredictability result in sell-offs of stocks on exchanges, as evidenced by the recent decline of the major stock indices on Wall Street after the U.S. government unveiled a $2 trillion bank rescue plan without some key details such as the timeline for the measures themselves. And liquidity on the exchange has again returned to a low level, which the domestic market has more or less recorded since the beginning of the year.
