Investors Still Find ERNT Shares Interesting

Today, no significant fluctuations in the Crobex are expected on the Zagreb Stock Exchange, as some investors are still on holiday, there are no major business news, and global stock markets are stabilizing after strong growth in recent days.

All 6 analysts from brokerage firms who participated in the Hina survey expect stagnation in the Crobex today. The Crobex index strengthened by 0.41 percent yesterday, reaching 1,770 points, while the Crobex10 weakened by 0.05 percent to 986 points. The regular trading volume of shares amounted to 9.6 million kuna, which is approximately 2 million less than the day before.

“I do not expect significant fluctuations in the Crobex today either, as it seems that a larger portion of domestic investors is still on holiday, and there are no major business news. The shares of Ericsson Nikola Tesla could again be in somewhat greater focus, as in previous days,” says Maja Bešević Vlajo, portfolio manager at Podravska banka.

Regarding macroeconomic indicators, the State Bureau of Statistics will today publish the first estimate of retail trade turnover for November of last year, and due to rising unemployment and falling real disposable income, a decline in consumption is expected for the ninth consecutive month.

Five macroeconomists who participated in the Hina survey expect, on average, a decline in consumption in November compared to the same month of the previous year by 5.9 percent. All respondents expect a decline, ranging from 5.4 to 6.5 percent.

This would mark the ninth consecutive month of declining consumption and a larger drop than in October, when retail trade turnover weakened by 5.7 percent.

“Given that investor activity is weak, the market has not reacted to poor macroeconomic indicators for some time,” notes Bešević Vlajo.

Stock prices are also stabilizing on foreign exchanges after two days of strong gains.

On Wall Street, stock prices slightly fell on Thursday – the Dow Jones index weakened by 0.16 percent, while the S&P 500 fell by 0.21 percent, and the Nasdaq index by 0.38 percent.

Thanks to an agreement between Republicans and Democrats on reducing the budget deficit, the S&P 500 index jumped a strong 4.3 percent in the previous two trading days, so a consolidation of stock prices was expected.

Euphoria has subsided also because further tough negotiations on reducing budget expenditures and the allowed level of government borrowing await Democrats and Republicans in the coming months.

Investors were also shaken by the minutes from the last meeting of the U.S. Federal Reserve, which showed that several Fed officials believe that asset purchase programs should be reduced or completely eliminated by the end of 2013.

On most Asian exchanges, stock prices fell this morning for this reason.

“Investors are expecting the release of a key report from the U.S. labor market today. Analysts estimate that the number of jobs in the U.S. economy increased by 150,000 in the past month, and that the unemployment rate remained at 7.7 percent. If this is indeed the case, it could strengthen consumer confidence and influence consumption growth,” concludes Bešević Vlajo.