Home / Media and Publications / ZSE: Stock Prices Fall for the Fourth Consecutive Week

ZSE: Stock Prices Fall for the Fourth Consecutive Week

Last week on the Zagreb Stock Exchange, stock prices fell for the fourth week in a row, and regular trading volume decreased for the sixth consecutive week, which could lead the market to enter its usual summer lethargy earlier than usual unless there is a return of part of the money from the dividend payout of HT into stocks next week.

The Crobex index weakened by 0.58 percent last week, to 2,063 points. After four weeks of losses, it is now up only 59 points, or 2.9 percent, compared to the beginning of the year. The Crobex10 index, on the other hand, weakened by 1.05 percent last week, to 1,120 points. Regular trading in stocks amounted to 80.5 million kuna, which is about 26 million less than the previous week. “After the end of the financial reporting season for companies, trading on the domestic exchange will be in an atmosphere of extremely low volumes, which could negatively affect stock price movements in the short term. We are gradually entering the usual summer lethargy,” says Dalibor Balgač, an analyst at the Economic Research Department of Hypo Alpe Adria Bank.

The most traded stock last week was HT’s stock. With a turnover of 23 million kuna, its price weakened by 0.43 percent, to 2,550 kuna. Next week, a dividend payout of 34.05 kuna per share is expected to be credited to HT shareholders’ accounts, totaling 2.79 billion kuna. Considering ownership shares, Deutsche Telekom receives 51 percent of the total dividend amount, the Croatian Veterans Fund 7 percent, and the Government 3.5 percent. The remaining shares in free circulation are held by private and institutional investors, who will receive 1.07 billion kuna in their accounts on Monday. “It is difficult to assess how many small investors are ready to return to the market at this moment after receiving the HT dividend. They are still very cautious, given the situation in the real economy and the lack of initial signs of recovery,” Balgač believes. In the construction sector, the stock prices of IGH, Ingra, Viadukt, Dalekovod, and Tehnika fell last week between 0.4 and 2.8 percent. In the shipping sector, only the price of Atlantska plovidba’s stock significantly increased, by 1.94 percent, to 999 kuna, while the prices of other shipping companies stagnated.

On the other hand, the price of Ericsson Nikola Tesla’s stock fell significantly by 9.4 percent, to 1,470 kuna, as it no longer carries the right to participate in the dividend payout of 120 kuna since last week. Conversely, the stock of Medika saw a strong price jump of over 16 percent following the announcement of the acquisition of this pharmaceutical company by Mavota, which holds a 24.1 percent stake in Medika, and operates jointly with Pliva, which has 24.71 percent of the shares, Medika itself (4.81 percent of its own shares), and Jasminka Herceg, who holds 0.54 percent of the shares.

Last week, the rise in stock prices on global exchanges could not provide a boost to the domestic market. The European Union’s plan to rescue the eurozone caused a real euphoria in global markets at the beginning of last week, leading to a strong rise in stock prices, but by the end of the week, those gains faded, as did investor enthusiasm.

On Wall Street, the Dow Jones index rose by 2.3 percent last week, while the S&P 500 strengthened by 2.2 percent, and the Nasdaq index by 3.6 percent. Stock prices also rose on European exchanges. The London FTSE index strengthened by 2.7 percent, while the Paris CAC jumped by 4.9 percent, and the Frankfurt DAX index by 5.9 percent. “On global exchanges, there is noticeable investor unease regarding the debt problems of Greece and other eurozone countries. A condition for receiving aid for financially troubled eurozone countries will be sharp cuts in budget deficits, while the countries providing aid will be pressured by additional expenditures, which will negatively affect their public spending. All of this could negatively impact further economic recovery, leading investors to fear the possibility of a double-dip recession,” says Balgač.

Due to significant investor uncertainty, stock price volatility is very pronounced, Balgač adds. Furthermore, leading economic indicators such as the Ifo index of German business optimism or the U.S. Purchasing Managers’ Index are still in a positive trend, but as they reach their highest multi-year levels, they increasingly attract investor attention, says Balgač. “We are getting closer to the point where these leading indicators will change direction, which will then negatively affect future earnings projections for companies, and subsequently stock prices,” concludes Balgač. (H)