Crobexes Highest in 15 Months

After three weeks of continuous growth, the Crobex indices reached new highs on the Zagreb Stock Exchange last week, with the stock of Petrokemija attracting the most investor attention.

The Crobex index jumped 2.23 percent last week to 1,885 points, while Crobex10 rose 2.07 percent to 1,051 points. These are the highest levels of these indices since September 2011.

Regular trading in shares reached 102.7 million kuna, which is about 32 million more than the previous week.

Continuously rising since the beginning of the year, the Crobex indices have jumped about 8.3 percent in the last three weeks.

“Crobex has outperformed other stock indices in the region with its growth since the beginning of the year, and trading volume has also increased, averaging around 20 million kuna daily this week, compared to 14 million a week ago. The liveliness of the stock exchange is attributed to the usual positioning of investors at the beginning of the year, as well as positive expectations due to Croatia’s entry into the European Union and potential privatization stories,” says Boris Mažurin, an analyst in the Economic Research Department of Hypo Alpe Adria Bank.

Last week, the focus of investors was on the stock of Petrokemija, which, with a turnover of 12.9 million kuna, saw its price drop by 1.12 percent to 238.50 kuna.

At the beginning of the week, the price of this stock jumped more than 8 percent, thanks to speculation about a possible privatization of the Kutina company.

However, when Economy Minister Ivan Vrdoljak stated on Tuesday that there are currently no plans for the privatization of Petrokemija, the price of its stock sharply fell.

Investor attention was also drawn to the news that Petrokemija signed a contract for the supply of 130 million cubic meters of natural gas with Prvo plinarsko društvo from Vukovar, with Gazprom Schweiz guaranteeing the security and terms of delivery.

“We can say that this is a ‘quiet’ entry of Gazprom into the Croatian industrial gas market. In recent years, the price of gas for industry has been rising, and the entry of this Russian company could increase competitiveness in the market and lead to a reduction in gas prices for industry, which would lower the operating costs of companies that use gas as a raw material or energy for production,” says Mažurin.

A significant turnover of over 9 million kuna was also achieved with HT shares, with its price rising by 1.19 percent to 213.5 kuna.

With a turnover of 5.7 million kuna, the price of Valamar Adria Holding shares increased by 2.65 percent to 122.15 kuna.

Among the most liquid issues, a strong price increase of nearly 7 percent was recorded for Atlantic Group shares, while the regular shares of Adris Group, Ericsson Nikola Tesla, and Belje rose by more than 4 percent.

In addition to the usually most liquid stocks, at the end of the week, the shares of construction companies were also in the focus of investors, after the government accepted the proposal for amendments to the Roads Act on Thursday, which should enable the completion of contracted works at existing construction sites.

This would ‘unfreeze’ 12 projects, worth a total of about 4.2 billion kuna, which had stalled due to a lack of secured funds or necessary permits.

This stimulated the construction sector, so last week the price of Ingra shares jumped by 19.8 percent, and Viadukt by 15.5 percent. Shares of IGH, Tehnika, and Hidroelektra niskogradnje rose by more than 7 percent, while the price of Dalekovod increased by 4.2 percent.

“In the coming days, I expect stagnation in the domestic market after strong growth at the beginning of the year, as I do not see anything fundamental that would encourage the market to continue rising. This stagnation could last until the end of the month when domestic companies will start publishing their business results for the previous year, and during that period, I expect more volatile trading. Given that the macroeconomic situation is not improving, I do not expect an improvement in companies’ business results compared to 2011,” says Mažurin.

Positive sentiment from global markets also influenced domestic investors last week, thanks to signs of strengthening in the US and Chinese economies, as well as somewhat better business results from companies than expected.

On Wall Street, the Dow Jones rose by 1.2 percent to 13,649 points, and the S&P 500 index by 0.9 percent to 1,485 points, marking the highest levels of these indices since December 2007. The Nasdaq index, on the other hand, strengthened by 0.3 percent.

On most European exchanges, stock prices also rose last week. The London FTSE index strengthened by 0.5 percent, and the Paris CAC by 0.9 percent. The Frankfurt DAX, however, weakened by 0.2 percent.

“Good macroeconomic data from China and the US have spurred the rise in stock prices on global exchanges. However, discussions are ongoing in Washington between Republicans and Democrats about raising the level of allowable government borrowing and reducing budget expenditures, which introduces a degree of uncertainty into the markets. Additionally, the season for quarterly business results announcements is underway, which also affects the direction of market movements,” concludes Mažurin.