Zagreb Stock Exchange Lacks Clear Directions

As with most major global markets, there are no clear directions regarding stock price movements on the Zagreb Stock Exchange, leading analysts to be divided in their assessments of today’s Crobex movement.

Of the 10 analysts from brokerage firms who participated in Hina’s survey, five expect an increase in Crobex, while five anticipate stagnation.
The Crobex index rose by 1.58 percent yesterday, reaching 1,309 points. The regular trading volume of shares was nearly 27 million kuna. "I expect even lower trading volumes today than yesterday, while Crobex, after yesterday’s recovery above 1,300 points, may stagnate today. The market has almost no clear directions as there is currently little happening in either the global or domestic economy," says Zvonimir Marić, a member of the Management Board of K.D. Asset Management. He adds that investor confidence is at very low levels.

"Pension funds face an uncertain situation regarding the future of the second pillar of pension savings, while investment funds have an aversion to investing in stocks, preferring to maintain their cash liquidity. The domestic market is very shallow and weak," says Marić. Additionally, it is currently very interesting to invest in the money market. Although interest rates on loans fell to an average of 12 percent yesterday, in such uncertain times, this seems a safer investment than stocks, says Marić. On Wall Street, leading indices rose more than 2 percent on Wednesday, breaking a five-day losing streak, as hopes that China would attempt to revive its economy with additional stimulus measures led to a rise in commodity prices, prompting investors to buy stocks in the energy and mining sectors.

Most Asian exchanges also saw leading indices rise this morning, but not as strongly as yesterday, as investors remain cautious. "Investors will not have confidence in the market until they see concrete results from the fiscal and monetary authorities’ measures, which have already begun to be implemented in most countries," assesses Marić. According to unaudited financial data for the past year, PBZ Group achieved a pre-tax profit of 1.57 billion kuna, while net profit amounts to 1.25 billion kuna, representing a 9 percent increase.

The profit of Privredna banka Zagreb before tax amounts to 1.33 billion kuna, and after tax, 1.1 billion kuna, according to PBZ. "Primarily due to chronic illiquidity, I believe that such results from PBZ will not significantly redirect investor interest towards bank stocks," emphasizes Marić, adding that the domestic banking sector is stable and that solid business results were expected for the past year. However, Marić believes that it is a good time to invest in stocks due to their very low valuations. "However, one must be very cautious – it is essential to invest in companies that have the potential to withstand the crisis or to be the first to emerge from it," concludes Marić for Hina’s financial service.