MOL’s Offer for INA Awakens Investors

Thanks to MOL’s offer to buy shares of INA from small investors, the Crobex indices on the Zagreb Stock Exchange surged at the end of last week, moving away from the lowest levels in over a year.

The Crobex index rose by 1.72 percent last week, to 1,815 points, while Crobex10 strengthened by 1.27 percent, to 963 points. On Friday alone, Crobex jumped by 1.74, and Crobex10 by 1.53 percent. The regular turnover last week amounted to 126.9 million kuna, which is 27.4 million more than the week before. “MOL’s offer to buy shares of INA served as a trigger for a significant jump in the indices and awakened the domestic market from stagnation. Next week, due to this offer, price volatility could be higher, as well as trading volume,” says Dalibor Balgač, an analyst in the Economic Research Department at Hypo Alpe Adria Bank. Trading in INA shares was temporarily suspended on Friday morning by the decision of the Croatian Financial Services Supervisory Agency (HANFA), after MOL announced its intention to buy shares of INA from small investors.

The trading suspension will last until the public is accurately and correctly informed about the circumstances of the offer from the Hungarian oil company MOL, which will be determined by HANFA and communicated to the Zagreb Stock Exchange, according to HANFA’s decision. The price of INA shares at the end of trading on Thursday was 1,711 kuna, while MOL offers 2,800 kuna for INA shares. “MOL’s offer pertains to 800,910 shares or 8.009 percent of INA shares held by institutional and private investors, which represents approximately 2.2 billion kuna. If even a small part of that amount returns to our very shallow market, demand will significantly strengthen,” believes Balgač. The most liquid stock last week, as usual, was HT’s share, which achieved a turnover of 37.2 million kuna, with its price weakening by 1.67 percent, to 268.92 kuna. Significant turnover of 30.3 million kuna was achieved in a single transaction on Monday with Belišće shares. Its price jumped by 8.63 percent, to 30.4 million kuna. In the construction sector, shares of Ingra, Tehnika, Dalekovod, and IGH increased by between 0.2 and 6.9 percent. The share of Viadukt, on the other hand, decreased by 3.74 percent, after being one of the biggest gainers the previous week, with a price jump of nearly 9 percent. In the shipping sector, shares of Uljanik Plovidba, Atlantska Plovidba, and Jadroplov strengthened between 0.36 and 3.55 percent. From macroeconomic data, it was reported last week that retail sales in November increased by 0.3 percent year-on-year, which is less than the consensus of macroeconomists, who expected a growth of 1.2 percent in a Hina survey.

“With a decline in industrial production in October of 4.4 percent, the slowdown in retail sales growth in November implies a weak figure for gross domestic product for the fourth quarter. On the path out of recession, it seems we are now in a phase of somewhat more pronounced imbalances, but it is very likely that we will see mild growth in economic activities next year. This growth would likely accelerate if necessary reforms were undertaken, but the opportunity for that is weak, given the upcoming election year,” assesses Balgač. Encouraging signals arrived from global stock markets last week, thanks to easing fears of a debt crisis spreading in the eurozone and a series of macroeconomic data indicating strengthening of the U.S. economy. On Wall Street, the Dow Jones index strengthened by 2.6 percent, while the S&P 500 jumped by 3, and the Nasdaq index by 2.2 percent. This is the largest weekly jump for these indices in the last month. European markets also experienced good sentiment last week. The London FTSE index strengthened by 1.35 percent, while the Frankfurt DAX jumped by 1.44, and the Paris CAC by 0.59 percent.

From a technical perspective, the most important indices on global markets reached this year’s maxima and are approaching resistance levels, says Balgač. “However, with the good macroeconomic indicators we are witnessing, especially for the U.S. economy, and with the easing of the debt crisis in the eurozone, investors are focusing on the expected continuation of accelerating growth of the world’s major economies next year. Because of all this, it seems that capital markets worldwide are ready to close the year on a positive note. Some of that may spill over to our market, as the announcement of anemic growth of the domestic economy next year, if it does not serve as a stimulus for growth, at least protects the market from further downward correction,” concludes Balgač. (H)