Dalekovod and Ina in Focus of Investors

With few active investors, the last day of this week could also pass in stagnation on the Zagreb Stock Exchange, with the stock of Ina potentially in greater focus for investors after Erste Bank analysts raised its target price, and information is also expected regarding changes in the ownership structure of Dalekovod.

Of the 10 analysts from brokerage firms who participated in Hina’s survey, 9 expect stagnation of the Crobex today, while 1 expects a decline. Domestic stock indices ended a 4-day positive streak yesterday, with Crobex weakening by 0.43 percent to 1,915 points, and Crobex10 by 0.46 percent to 1,011 points. Regular trading yesterday amounted to 21.2 million kuna, which is 7 million more than the previous day. The Crobex index rose by 3.6 percent in September, while Crobex10 strengthened by 3.3 percent. In comparison, the S&P 500 index jumped by 8.8 percent in the same month. With a growth of 10.7 percent, this index also significantly outperformed Crobex in the entire third quarter. Namely, Crobex strengthened by 3.2 percent in the last quarter, while Crobex10 increased by 2 percent.

"I expect a continuation of lethargy in the domestic market with only slight oscillations of Crobex. Given that there are very few active investors, even the data on a significantly better-than-expected increase in domestic retail sales in August does not provoke a market reaction. Only the quarterly financial reports of companies could attract their attention, but these will start arriving only at the end of October," emphasizes Maja Bešević, portfolio manager at Podravska Bank. The stock of Ina could be in somewhat greater focus for investors after Erste Bank analysts raised its target price to 2,200 kuna. Additionally, the market is awaiting data from the Central Clearing Depository on changes in the ownership structure of Dalekovod, after a larger transaction involving these shares was conducted on Tuesday, representing a 5 percent ownership stake in that company. Among other company news, shares of AD Plastika have been included in the Official Market of the stock exchange as of today. From global markets, signals of cautious trading are arriving. On Wall Street, stock prices fell on Thursday, but throughout September, the S&P 500 and Nasdaq indices recorded the largest monthly jump since April last year, thanks to data showing that the U.S. economy is not as weak as investors feared. Throughout September, which is traditionally the weakest month for the capital market, the S&P index rose by 8.8 percent, reaching 1,141 points yesterday, while in the third quarter it gained 10.7 percent, marking its largest quarterly growth in a year.

"The U.S. S&P 500 index is facing resistance at 1,150 points while the first support level is at 1,130 points. Analysts expect the index to hover around 1,200 points by the end of the year," says Bešević. Asian stock prices rose this morning, positively influenced by better-than-expected data on the Chinese Purchasing Managers’ Index, indicating that the world’s second-largest economy continues to grow steadily. European stock prices also strengthened this morning. New guidelines will be provided to investors this afternoon by the ISM index of business conditions in the U.S. manufacturing sector. Economists estimate that industrial activity in the U.S. slightly weakened in September, so the ISM index could fall from 56 to 54 points, but it remains above 50 points, indicating continued expansion. "The data on the decline in consumer confidence in the U.S. below 50 points has negatively impacted Wall Street over the past week, indicating negative employment outlooks. Therefore, speculation is increasing regarding further quantitative easing of U.S. monetary policy. Next week, we expect the release of key employment reports in the U.S. for September, after which investor focus will shift to the quarterly financial reporting season of U.S. companies," says Bešević.

In the global shipping market, freight rates have mostly stagnated over the past week, with the Baltic Dry Index (BDI) strengthening by only 2 points to 2,446 points. "Over the past week, the BDI has slightly increased, mainly due to higher freight rates for cape-size vessels. There is speculation in the market that China will not halt operations in 2,000 raw material processing factories for not meeting stricter energy standards, which would mean that Chinese demand for raw material imports will not weaken," notes Bešević. Thanks to good macroeconomic data from China and the U.S., investors hope that demand for oil will also rise. Therefore, this morning on Asian markets, the price of ‘black gold’ broke above $80.50 per barrel. "From a technical perspective, the price of oil has broken the 200-day moving average and is at its highest level in nearly 8 weeks. This is contributed by the shutdown of certain U.S. refineries for regular maintenance, which has reduced their capacity utilization from 87 to 85 percent, the lowest level since April of this year," concludes Bešević. (H)