Does the construction sector encourage further growth of Crobex?

Good news regarding the domestic consortium’s work in Montenegro, along with positive sentiment in global stock markets due to the turnaround regarding the Greek debt crisis, could today stimulate further growth of Crobex on the Zagreb Stock Exchange.

Of the 11 analysts from brokerage firms who participated in Hina’s survey, seven expect an increase in Crobex today, while four anticipate stagnation. Primarily due to the rise in stock prices in the construction sector, the Crobex index strengthened by 0.55 percent yesterday, reaching 2,159 points. Crobex10 rose by 0.61 percent to 1,145 points. The regular trading volume amounted to 32.4 million kuna, which is double that of the previous day."The euphoria surrounding the construction sector, which began yesterday after good news regarding the domestic consortium’s work on the highway construction in Montenegro, is very likely to continue today, which could stimulate further growth of Crobex. A positive day on Wall Street supports such a scenario," believes Goran Vorkapić, broker and investment advisor at Centar Bank. The Split construction company Konstruktor, leading the domestic consortium that also includes IGH and Tehnika, submitted guarantees to the Montenegrin government yesterday for financing the construction of the Bar-Boljari highway, and now the signing of final financial contracts should follow.

The IGH stock rose by 13.86 percent yesterday to 3,130 kuna, while Tehnika increased by 17.3 percent to 1,899.98 kuna."With increased trading volume due to greater investor focus on the construction sector, I expect stagnation of Crobex today. Namely, I believe that the rise in stock prices of construction companies will deflate and that profit-taking will follow for investors who entered those stocks in previous days," says Nikola Dulčić, investment advisor at the brokerage firm To One. Dulčić also notes that investors lack comprehensive information about the consortium’s revenues from this project."The lack of information related to the domestic consortium’s revenues from the work in Montenegro leaves speculative room for stock price movements," says Dulčić. Positive signals are coming from global stock markets. On Wall Street, the Dow Jones index recorded its largest daily jump in the last three months on Tuesday, returning above the 10,000-point level, as investors were encouraged by the news that eurozone authorities would assist Greece in resolving its financial problems.

European stock prices also significantly increased at the start of today’s trading due to this. "A favorable turnaround regarding the Greek debt crisis could have a stabilizing effect on global stock indices," believes Dulčić. Vorkapić adds that global markets have been very volatile in recent days, making it difficult to predict which trend will prevail. "The technical picture of the American market indicates that the most important stock indices have broken the upward trend, pierced the 20 and 50-day moving averages, and have remained at the 200-day moving average, which has proven to be a significant resistance to further declines. In such a situation, it is still unclear whether a negative or positive trend will prevail," assesses Vorkapić. From a fundamental perspective, the business results of American companies are not bad, and macroeconomic indicators generally point to an economic recovery."However, the large American budget deficit represents a smoldering problem. Therefore, we are facing a very volatile period on Wall Street. And regardless of domestic builders, and the weak correlation between the American S&P and Crobex indices in recent months, Crobex cannot maintain an upward trend for long without support from foreign markets," concludes Vorkapić. (H)