Is there a solution for Dalekovod?

On the Zagreb Stock Exchange, the Crobex indices could weaken today for the fourth consecutive day, under pressure from the construction sector, primarily the shares of Dalekovod, as well as due to negative movements in global markets.

Of the 8 analysts from brokerage firms who participated in the Hina survey, 4 expect a decline in Crobex, while 4 expect stagnation.

The Crobex index fell by 0.40 percent yesterday, to 1,746 points, while Crobex10 decreased by 0.01 percent, to 989 points. The regular turnover amounted to 21.4 million kuna, which is approximately 9.2 million more than on Friday. The shares of Dalekovod faced the highest selling pressure yesterday, with its price plummeting by more than 21 percent, to 67.39 kuna, with a turnover exceeding 3 million kuna.

Following the previously published official notice from Dalekovod regarding the blocking of its account, media reports emerged yesterday suggesting that the company is likely on the verge of a pre-bankruptcy settlement. However, there are currently no official confirmations regarding this. In the construction sector, the prices of shares of Ingra fell significantly yesterday by 6.2 percent, and Viadukt by 7.2 percent.

Among the issues with million kuna turnover, the shares of Luka Ploče recorded a price drop of 2.7 percent yesterday, while HT fell by 1.2 percent, and the shares of Končar EI strengthened by 1.4 percent.

“I expect a decline in Crobex today as well, mainly due to the shares of Dalekovod, as well as other issues that have a greater weight in the indices, and also due to the likely spillover of negative sentiment from foreign exchanges,” says Ana Franin, a financial analyst at Raiffeisenbank Austria. She adds that the shares of Dalekovod could still be in greater focus for investors today, as the company’s account remains blocked, and there is currently no solution in sight.

The management of Dalekovod reported to the Stock Exchange yesterday that it is still negotiating with its creditors regarding the resolution of the account blockage issue. It also stated that it is trying to find solutions that would be best for the company and its creditors, and in this sense, a pre-bankruptcy settlement is one of the possible solutions, but not the only one. On foreign exchanges, investors are not inclined to risky investments due to U.S. budget problems and the debt crisis in the Eurozone, Franin notes.

On Wall Street on Monday, stock indices remained almost unchanged as investors were unwilling to significantly change positions ahead of the battle over the ‘fiscal cliff’. The Dow Jones index remained unchanged, while the S&P 500 strengthened by 0.01 percent. The Nasdaq index, on the other hand, weakened by 0.02 percent. Investor caution is a result of fears that Congress and the White House will not resolve budget issues by the end of this year. If they fail to do so, the beginning of next year threatens the ‘fiscal cliff’, an automatic reduction in budget expenditures and the elimination of tax breaks, totaling around 600 billion dollars, which could push the economy into recession.

Intense negotiations over budget solutions could, investors fear, negatively impact the sentiment of entrepreneurs and consumers, which would harm investments and consumption, and thus the overall economy.

As a result, stock prices fell this morning on Asian and European exchanges. In addition to budget problems in the U.S., investors are also concerned about the Greek debt crisis and the weakness of the largest global economies. “For new guidelines, investors are waiting for the release of the ZEW index of German economic confidence, but they are not optimistic about that data,” concludes Franin.