Part of the money from the sold HT shares flowed into other blue-chip stocks

After a very exciting last week on the Zagreb Stock Exchange, marked by a significant drop in the price of HT and a rise in other blue-chip stocks, the market could once again plunge into stagnation next week, with new directions for investors expected to come from the financial reports of companies for the first quarter.

After three positive weeks, the Crobex index weakened last week by 0.09 percent, to 2,192 points, while Crobex10 fell by 0.82 percent, to 1,184 points. Regular trading in shares amounted to 182.8 million kuna, which is about 14 million less than the previous week.

"We had a very exciting week on the stock exchange, primarily due to the ex-dividend day for HT shares, after which a considerable amount of cash was released. This awakened investors and encouraged them to buy other blue-chip stocks. However, that speculative buying could not last long, as the domestic business and macroeconomic environment has not changed yet, so by the end of the week, trading volume was significantly reduced", says Matko Bošković, broker and investment advisor at the investment company To One.

Last week, the focus of investors was on HT shares, as from Monday they no longer carry the right to a dividend of 34 kuna. As a result, the price of that share, with a turnover of about 89 million kuna, fell by 13.5 percent, to 282.5 kuna. The drop in its price exceeds 34.05 kuna, which is the amount of the dividend that was voted on at the HT shareholders’ General Assembly on Wednesday. Analysts point out that the significant drop in the price of that share is also a consequence of the announcement by the company’s CEO Ivica Mudrinić about somewhat weaker business performance of HT at the beginning of this year.

However, part of the money obtained from the sale of HT shares returned to the market, into other ‘blue-chip’ stocks. Of this, the share of Ericsson Nikola Tesla benefited the most, achieving a turnover of about 12 million kuna, and its price strengthened by 3.7 percent, to 1,700 kuna.

Construction stocks also achieved a greater price increase. Thus, the share of IGH rose by 5.7 percent, to 2,620 kuna. The prices of shares of Tehnika, Ingra, and Dalekovod also increased significantly, between 3.3 and 3.6 percent. A slightly higher turnover, around 6 million kuna, was also achieved with the share of Podravka, whose price strengthened by 1.4 percent, to 353 kuna.

The announcement of the Government’s economic measures program for exiting the crisis on Tuesday did not significantly affect investor sentiment on the stock exchange. Analysts assess that the key measure for the business sector from that program is the settlement of state debts to companies, but they also emphasize that only the realization of that extensive program could give a positive impulse to the capital market. However, the domestic capital market, like others in the world, was partially supported by the good mood on Wall Street.

Thanks to good business results from American companies, prices on the largest stock exchange in the world reached their highest levels in 19 months last week. The Dow Jones index rose by 1.7 percent, while the S&P 500 jumped by 2.1, and the Nasdaq index by 2 percent. This marks the eighth consecutive week of growth for the Dow Jones and Nasdaq indices, while the S&P has risen in seven of the last eight weeks.

However, European exchanges traded cautiously last week due to the deepening Greek debt crisis. The London FTSE weakened by 0.4, and the Paris CAC index by 0.9 percent. The Frankfurt DAX index, on the other hand, rose by 1.3 percent.

"On Wall Street, leading indices are likely approaching their peak, and a downward correction could follow. We see that so far, neither mediocre financial reports from certain companies in the retail, technology, and mining sectors, nor the deepening Greek debt crisis are stopping the positive trend, but it would be good for a correction to follow after such a prolonged rise in the indices," believes Bošković.

On the global shipping market, freight rates are stagnating, and the BDI index for bulk freight is slightly oscillating around 3,000 points. The week ended at 3,013 points. However, shipments of iron ore have significantly increased in recent days, and as the mining company BHP Billiton aggressively charters cap-size vessels for transporting raw materials, an increase in demand for shipping is expected. The average freight rate, currently at 27,000 dollars, could reach 30,600 dollars in the coming days, analysts say. This has stimulated the domestic shipping sector, with the price of Atlantska plovidba rising by 4.1 percent last week, while the share of Jadroplov increased by 5.8 percent.

The price of the Uljanik plovidba share rose by about 2 percent. This share was included in the Official Market last week, and a contract was signed between Raiffeisen Bank and the Zagreb Stock Exchange for market making for this share, which should improve its liquidity.

"Next week, I do not expect significant price movements in domestic shipping shares. Although in recent weeks they have somewhat lagged behind the price increases of foreign shipping companies, it should be noted that domestic shippers have recorded growth since the beginning of the year compared to the negative trend of those leading foreign shippers. A slight increase in freight rates will not have a significant impact on the revenues of domestic companies," assesses Bošković. He also believes that next week we will likely not see a repeat of last week’s exciting trading.

"The domestic market could once again plunge into stagnation, primarily due to HT shares, as due to the announcement by CEO Mudrinić about a weaker start to the year for HT, compared to 2009, I do not expect a quick recovery in the price of that share," says Bošković.

The season for the announcement of financial reports for the first quarter of this year begins in the middle of next week. Most reports will be published on April 30, Friday, and their publication for that day has already been announced by HT and Petrokemija. "We already have announcements of somewhat poorer business results for HT and losses for Petrokemija. No one believes that last year’s results, which were still quite solid, could be repeated, so investors will be cautious," emphasizes Bošković. (H)