Due to Linić’s Guarantees, the Construction Sector is in Focus

Today, a calm trading session is expected on the Zagreb Stock Exchange as investors await new news from the domestic construction sector, while concerns loom over the announcement of the resignation of Italian Prime Minister Mario Monti on European exchanges.

Of the 8 analysts from brokerage firms who participated in the Hina survey, 5 expect stagnation of the Crobex today, 2 anticipate an increase, and one predicts a decline. The Crobex index weakened by 0.12 percent last week, closing at 1,758 points, while the Crobex10 strengthened by 0.32 percent to 993 points. Regular trading amounted to 56.5 million kuna, which is approximately 4 million less than the previous week.

The highest turnover last week was recorded by HT shares, amounting to 9.6 million kuna, with a price increase of 0.63 percent to 203.45 kuna. This was followed by the preferred shares of Adrisa with a turnover of 9.1 million kuna and a price increase of 0.80 percent to 250.5 kuna. Among the more liquid issues, a sharp price drop was recorded for Dalekovod shares, down by 13.7 percent, with a turnover of 3.4 million kuna.

“In the past week, the domestic market oscillated between positive and negative territory, with still modest liquidity – the daily average turnover reached around nine million kuna,” says Davor Špoljar, senior capital market analyst at Erste&Steiermaerkische Bank.

On global exchanges, stock prices rose last week, thanks to investors’ hopes that the U.S. will avoid the ‘fiscal cliff’, although there has been no progress in negotiations between Republicans and Democrats. On Wall Street, the Dow Jones increased by 1 percent last week, while the S&P 500 index rose by 0.1 percent. However, the Nasdaq index weakened by 1.1 percent.

“Foreign exchanges experienced positive trading last week. Among the major global indices, only the Italian and Spanish ones weakened. News about the ‘fiscal cliff’ continues to dominate the markets, and investors hope for an agreement on the budget in the U.S. Congress. However, macroeconomic news from Europe has been quite poor,” notes Špoljar. The ECB has lowered its growth forecasts for the Eurozone, as has the Bundesbank for the German economy.

“Central banks have postponed recovery forecasts from 2013 to 2014, and the media increasingly raises the question of a double-dip recession,” says Špoljar, adding that the same news will dominate foreign exchanges this week.

“Negotiations on the U.S. budget will be monitored, and in Europe, macroeconomic announcements. The first announcement is due tomorrow – the ZEW Economic Sentiment Index,” emphasizes Špoljar. This morning, European stock indices slightly weakened after Italian Prime Minister Mario Monti announced his resignation last weekend. On the domestic market, trading today could be calm, with news from the construction sector likely to be in greater focus, concludes Špoljar.

Some media speculate that progress has been made regarding the rescue of construction companies whose business accounts have been blocked. The Ministry of Finance has agreed to provide priority guarantees for new bank loans to companies in pre-bankruptcy settlement, which is a condition for banks to engage in rescuing construction companies. This would be part of a package of amendments to the Financial Operations and Pre-Bankruptcy Settlement Act.