A strong decline in domestic consumption indicates that the path to economic recovery will be long and difficult, and the instability of global markets today could result in yet another lethargic day on the Zagreb Stock Exchange.
Of the nine analysts from brokerage firms who participated in Hina’s survey, five expect stagnation of the Crobex today, three expect a decline, and one anticipates an increase. With slightly higher trading volume, the Crobex index managed to recover most of the losses recorded during the morning by the end of trading yesterday, finishing at 2,058 points, which is 0.04 percent lower than the previous day. At the same time, the Crobex10 was down just 0.01 percent, at 1,084 points. Regular trading in shares amounted to nearly 35 million kuna, which is about 15 million more than the previous day. “I expect a continuation of the lethargic mood today, with very slight fluctuations in the Crobex. Investors lack optimism, which continuously pushes the market into the negatives,” emphasizes Kristijan Cvjetović, a member of the Management Board of the brokerage firm K.D. Asset Management. Caution prevails on global exchanges as well. On Wall Street on Wednesday, with thin trading and cautious trading, stock prices rose slightly, mainly due to the weakening of the dollar, which prompted investors to buy riskier assets. However, on Asian exchanges, stock prices fell today for the third consecutive day, as investors are increasingly concerned about budget deficits in several countries, and the weakness of the Japanese economy raises questions about the speed of recovery.
Investors are also cautious on European exchanges at the start of today’s trading. “On global exchanges, investors are undecided about which direction the indices should take after a strong surge since mid-March. This sentiment is spilling over to our market, which is already under pressure from domestic economic problems. For now, it seems that there will be nothing of the usual surge in stock prices at the end of the year,” says Cvjetović. Data released yesterday by the State Bureau of Statistics shows that retail sales in October fell by 15.4 percent year-on-year, which is more than expected. This marks the 13th consecutive month of declining consumption, and the decline is accelerating, given that it decreased by 12.8 percent in September. The October decline is also significantly greater than the 12.1 percent that analysts surveyed by Hina had expected. Analysts point out that the unexpectedly sharp decline in sales indicates that consumer pessimism is rising, primarily due to increasing unemployment. “Consumer and investor expectations regarding the situation in the domestic economy are quite poor. There is no optimism, and therefore, of course, no inclination for investors to invest in stocks,” assesses Cvjetović.
