Investors Await New Macroeconomic Indicators

At the Zagreb Stock Exchange, calm trading is expected at the beginning of the week as there are currently no news from the world or the domestic economy to awaken investors, although data on unemployment could attract their greater attention.

Of the eight analysts from brokerage firms who participated in Hina’s survey, six expect stagnation of the Crobex today, one expects an increase, and one expects a decrease. Last week, the Crobex index rose by 1.5 percent to 2,171 points, while Crobex10 strengthened by 1.8 percent to 1,161 points. Regular trading in shares reached around 115 million kuna, which is about 15 million more than a week earlier. “Last week, the government announced the abolition of part of the crisis tax, and it was reported that 712 building permits were issued in January, which is 17.4 percent less compared to the same month last year, but investors could not find guidance for further movement of the domestic index based on this data. In more active trading of bonds, it is evident that domestic investment and pension funds have opted for safer investments – in new issues of government bonds,” emphasizes Žaran Perić, investment advisor at the brokerage firm EA Sistem. Trading on global exchanges was also cautious, and the most important indices only slightly increased, as investors are not sure that existing macroeconomic indicators support further growth in stock prices, which has been ongoing for a year, adds Perić.

This morning, however, on most Asian exchanges, stock prices fell, as last week’s macroeconomic data did not provide a clearer picture of the situation in the U.S. and other major world economies. “This week, several important macroeconomic reports will be released in the U.S., for example, data on industrial production by regions and the index of leading economic indicators. Likewise, the meeting of the leaders of the U.S. Federal Reserve will be in focus for investors. The Fed is expected to keep key interest rates at record low levels and announce that they will remain so for some time,” states Perić. After a brief stagnation, the Baltic Dry Index (BDI) significantly increased at the end of last week. For the entire week, it was up 8 percent to 3,506 points. “I expect investors to closely monitor the further movement of this index. With any new increase, domestic shipowners could also come into focus for investors,” emphasizes Perić.

In the week ahead, Perić does not expect major changes in the domestic market. “I expect calm trading to continue in the domestic market and stagnation in stock prices, with a slightly greater focus on the shares of T-HT and Ericsson Nikola Tesla. However, as there is still just over a month until the shareholders’ meetings of these companies, I do not expect a significant increase in their prices. Investors are still waiting for news that could trigger the market, while the Crobex has been at similar levels for weeks, around 2,150 points,” assesses Perić. He adds that today’s announcement of new macroeconomic indicators could be of greater focus for investors, especially the one on unemployment. The Croatian Employment Service is expected to publish a report today on the number of unemployed in February, after 18,000 workers were left without jobs in January, and the number of unemployed reached 309,500, the highest level since March 2006. Five macroeconomists who participated in Hina’s survey estimate that between 5,500 and 11,500 workers were left without jobs in February. On average, they expect an increase in the number of unemployed by 9,500 to 319,000. This would be the highest number of unemployed since April 2005. Additionally, the Croatian Bureau of Statistics will publish a report today on consumer prices for February. Six macroeconomists who participated in Hina’s survey estimate that inflation in February was between 0.6 and 1 percent compared to the same month last year. On average, they expect a decrease in the annual inflation rate from January’s 1.1 to 0.8 percent. This would be the lowest inflation since September 2002, when it was 1 percent. (H)