Optimism from the World Lifts Crobex Above 1900 Points

Thanks to the optimism that has swept through Asian and European markets following the G20 summit, the Crobex index on the Zagreb Stock Exchange could recover some of last week’s losses today, when it fell below the psychologically important level of 1,900 points.

Of the 10 analysts from brokerage firms who participated in Hina’s survey, 6 expect Crobex to stagnate today, while 4 anticipate an increase. The Crobex index fell by 1.72 percent last week, to 1,872 points, while Crobex10 dropped by 1.55 percent, to 990 points. Both indices plunged to their lowest levels since September 7, when Crobex was at 1,869 points and Crobex10 at 987 points. Regular trading amounted to only 51 million kuna, nearly half of what it was a week earlier. „While stock prices on global exchanges have risen for the third consecutive week, due to a lack of guidance regarding the recovery of the domestic economy, current political instability, and the drop of Crobex below the psychologically important threshold of 1,900 points, domestic investors have begun to intensify their selling of shares, lowering Crobex by 1.7 percent last week,“ says Žaran Perić, an investment advisor at the investment company EA Sistem. Last week, the Croatian Bureau of Statistics (DZS) reported that the unemployment rate in Croatia rose from 16.4 to 16.9 percent in September, more than expected.

Additionally, the DZS announced that construction work in Croatia decreased by 11.7 percent in August this year compared to the same month last year. On a positive note, industrial production surprised with a 3.1 percent increase in September compared to the same month last year, which is above all expectations and is primarily attributed to the strengthening of foreign demand and inventory replenishment. "However, the market did not react to this data, as investors expect a more sustainable growth trend in production," says Perić. The stock of AD Plastika was the winner of the week, rising by more than 14 percent to 104 kuna, with a turnover of 2.4 million kuna. Perić links the increased investor interest in this stock to its recent inclusion in the Official Listing of the stock exchange.

On global exchanges last week, stock prices rose for the third consecutive week, thanks to strong quarterly business results from companies and hopes that the U.S. Federal Reserve will further ease monetary policy on November 3. This week, a continuation of better-than-expected business reports from companies is anticipated, which should positively impact the market, with the most important macroeconomic reports being those on existing home sales, durable goods orders, and the U.S. GDP in the third quarter. „Regarding the domestic capital market, we expect the start of the financial reporting season for the third quarter this week. It is difficult to expect positive shifts in company reports due to the current situation in the domestic economy. On the other hand, it is possible that some companies will surprise and report better-than-expected results, which could bring their stocks into slightly greater focus for investors,“ believes Perić.

At the meeting of finance ministers and central bank governors of the G20 group of the world’s largest economies on Friday and Saturday in South Korea, it was agreed that members of this group would not resort to weakening their currencies to increase the competitiveness of their export products in the global market. This compromise conclusion was reached after the U.S. accused China and some other developing countries of artificially maintaining their currency exchange rates at low levels to boost their exports and, consequently, economic growth. „Investors on global exchanges have reacted positively to this agreement, judging by the morning rise in stock prices on Asian and European exchanges. I hope that some of this optimism will also reach the domestic market, so I expect an increase in Crobex today,“ concludes Perić. (H)