Continuation of Crobex Stagnation Expected at ZSE

At the Zagreb Stock Exchange today, a continuation of Crobex stagnation is expected, as no encouraging news is coming from the domestic economy or global markets, while a potential positive signal for the market could come from the data on domestic industrial production, if it exceeds expectations.

Of the 13 analysts from brokerage firms who participated in Hina’s survey, 12 expect stagnation of Crobex today, while one expects growth. The Crobex index strengthened by 0.33 percent yesterday, reaching 1,907 points, while Crobex10 increased by 0.16 percent to 1,000 points. Regular trading amounted to only 9.9 million kuna, which is about one million kuna less than the previous day.

“I expect stagnation in the domestic market today as there are no positive news that could stimulate further growth of Crobex, after it surpassed the psychologically important threshold of 1,900 points. Unfortunately, the daily trading volume has again fallen below 10 million kuna. A slight positive stimulus for the market could come from today’s announcement of industrial production data, if it pleasantly surprises like retail sales, which ended a 21-month decline in July,” says Matko Bošković, broker and investment advisor at Centar banka. The State Bureau of Statistics will publish a report on industrial production for August today, which is expected to show a further decline in industrial production, but smaller than in July, when it weakened by 1.8 percent compared to the same month last year.

Five macroeconomists who participated in Hina’s survey estimate, on average, that industrial production in August fell by 0.9 percent compared to the same month last year. Their estimates range from stagnation to a production decline of 2 percent. However, Bošković adds that due to weak indicators, there is no investor interest in the shipping and construction sectors. The Baltic Dry Index (BDI) continued to slide this week, weakening by 2.5 percent yesterday to 2,562 points, and the purchase of 3,450 shares of Atlantic Shipping for the treasury did not provoke a reaction from investors. There is still no light at the end of the tunnel in the construction industry. The latest data from the DZS indicates a 32.1 percent decline in the value of completed construction works in the first half of this year compared to the same period last year, while the value of new orders has simultaneously decreased by 53.2 percent. Meanwhile, cautious trading prevails on global markets. On Wall Street, the S&P 500 and Nasdaq indices slightly fell on Tuesday, while the Dow Jones remained almost unchanged, after the U.S. Federal Reserve indicated that it is ready to take new measures to stimulate economic growth. In Asian markets, stock prices rose this morning, while the dollar’s exchange rate against the euro fell to its lowest level in six weeks.

“At yesterday’s meeting, Fed leaders indicated that they are ready to adopt new measures to assist the economy and that the inflation rate is lower than expected. This led some investors to conclude that the Fed will announce the start of the second phase of quantitative easing at its next meeting in November, i.e., further purchases of debt securities,” emphasizes Vjeran Jureša, an analyst at the investment company To One. In such an environment, the U.S. dollar has lost value, while gold and bond prices have risen sharply. “On the stock markets, the latest messages from the Fed have introduced a slight degree of uncertainty, as the announcement of further easing of monetary policy means that the world’s largest economy still needs help in recovery, which is a limiting factor for stock price growth,” notes Jureša. Therefore, he expects stagnation of Crobex and slight price fluctuations in the domestic market today. However, as he points out, the optimism that has recently driven positive shifts in global capital markets has managed to hold on. “If this trend continues on global markets, the domestic market should also begin to follow such movements to some extent,” concludes Jureša. (H)