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Strong Growth of Global Stock Markets Encourages Investors in Croatia

Strong growth of the most important global stock indices could positively affect the Zagreb Stock Exchange today, but new guidelines from the domestic economy are expected only at the end of the week, when the season for the release of quarterly financial reports from domestic companies begins.

Of the nine analysts from brokerage firms who participated in Hina’s survey, six expect stagnation of the Crobex today, while three expect an increase. After three positive weeks, the Crobex index weakened last week by 0.09 percent, to 2,192 points, while the 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. “After an exciting start to the week, mainly due to the sale of HT shares, which can no longer yield a dividend right, and intensified purchases of other blue-chip issues, cautious trading at global stock markets, poor domestic macroeconomic indicators, and unclear procedures for implementing the action measures of Prime Minister Jadranka Kosor for pulling the economy out of the crisis have reduced investors’ willingness to buy shares, leading to a drop in trading volume,” says Žaran Perić, investment advisor at the investment company EA Sistem.

At the beginning of this week, Perić expects stagnation of the index and cautious trading. “Only at the end of the week will investors receive new guidelines, when the financial reports for the first quarter of this year are expected to be released, as well as reports for 2009 from those companies that have not yet published them. As some companies have already announced somewhat poorer business results, investors will be cautious,” notes Perić. And since no significant news related to the domestic economy and business sector is expected at the beginning of this week, investors will pay more attention to developments in global stock markets, which have also started this week with rising indices, believes Perić.

In Asian markets, stock prices rose this morning, and the euro also recovered as investors breathed a sigh of relief after Greece officially requested assistance from the EU and the IMF on Friday to address its financial problems. European indices also rose sharply this morning. “This week, the report on the gross domestic product of the USA in the first quarter and the regular meeting of the leaders of the American central bank, where they are expected to decide whether to keep interest rates unchanged, are awaited with the most attention,” concludes Perić. Besides financial reports, attention from investors in the domestic market may also be drawn to new speculations in the media regarding the construction of a highway in Montenegro. “Media speculation has begun that Croatian consortiums led by Konstruktor may again be invited to negotiate the construction of the highway, but under the condition of secured financial guarantees, which could encourage investors to position themselves in shares of the domestic construction sector,” note analysts from Hypo-Alpe-Adria Bank in a client note. (H)