Small Investors Active, Institutional Investors Cautious

After the Crobex index fell for the fifth consecutive day yesterday, accompanied by extremely low trading volume, today there is a possibility of a reversal in stock prices, but only if liquidity finally increases on the Zagreb Stock Exchange.

The Crobex index weakened by 0.83 percent yesterday, to 2,073 points, the lowest level in two weeks. The Crobex10 fell by 0.57 percent, to 1,087 points. Regular trading in shares amounted to 15.5 million kuna, što is about 10 million kuna less than on Friday. This is the lowest daily turnover since the summer months, specifically since August 20. Of the 10 analysts from brokerage firms who participated in Hina’s survey, six expect an increase in Crobex today, three expect a continuation of the decline, and one expects stagnation.

"Until liquidity increases in the domestic market, every comment is superfluous. For now, mainly small investors are active, while institutional investors are cautious. Due to weak liquidity, we are unable to follow the positive trend in global markets," says Nada Ružić, CEO of the brokerage firm Argus Securities. However, if trading volume increases, it is realistic to expect a rise in stock prices in the domestic market, considering that the Crobex has slid down for five consecutive trading days, believes Nada Ružić.

Leading indices on Wall Street jumped more than one percent on Monday, breaking a three-day negative streak, as strong growth in home sales in the U.S. encouraged investors, while rising commodity prices boosted stocks in the mining sector. However, leading indices on Asian markets fell this morning, despite yesterday’s gains on Wall Street, as a call from Chinese monetary authorities to banks to maintain control over lending caused a drop in financial stock prices. This week is poor in terms of domestic macroeconomic indicators, which also partially affects the low activity of investors.

"Definitely, a culture of monitoring macroeconomic indicators is being created here, as is the case in developed markets around the world, but this week is poor in announcements," concludes Ružić. The focus of investors on the Zagreb Stock Exchange could be the shares of INA today. Namely, the media reports that INA’s debt to the state of 1.5 billion kuna has forced the company to start negotiations with MOL regarding the sale of oil fields in Syria in order to raise a loan for paying taxes and duties, and since the price did not seem appropriate, the state decided to introduce competition – domestic companies. The idea has emerged that several domestic companies, led by Janaf, will compete to purchase stakes in INA’s fields in Syria.

The shares of Podravka could also be in focus for investors. The Supervisory Board has determined that financial statements were falsified and that many business activities were not recorded in the books at all, thus for the first time since its establishment, the company from Koprivnica is facing a loss, the media reports today. The secret plan to take over Podravka was initially estimated to cost 250 million kuna, but the damage is increasing. The Chairman of the Supervisory Board, Ljubo Jurčić, confirmed that there are more than 300 million kuna in risky placements, including 65 million to SMS, 46 million to OTP Bank, and about 200 million kuna to Fimi. (H)