IGH Under Investor Scrutiny Again Today

Under pressure from a sharp decline in stock prices in the construction sector, the Crobex index of the Zagreb Stock Exchange plunged yesterday to its lowest level since mid-January, and as there are no encouraging news, it could be under pressure today as well, albeit somewhat less than yesterday.

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

The Crobex index fell by 0.64 percent yesterday, to 1,886 points, the lowest level since January 18, when it closed at 1,886 points. The Crobex10 slipped by 0.28 percent, to 1,071 points, the lowest level since February 22.

In the first three months, the Crobex indices jumped more than 15 percent, but in recent weeks those gains have faded, so now, compared to the beginning of the year, the Crobex is up 8.4 percent, and the Crobex10 is up 10.3 percent.

Regular trading amounted to around 8 million kuna yesterday, which is approximately the same as on Friday.

The biggest loser was the construction sector, as pre-bankruptcy settlement and restructuring procedures resulted in a sharp decline in stock prices of several construction companies.

The stock of the IGH Institute was the biggest loser of the day, as it announced on Friday that it had submitted a request to open pre-bankruptcy settlement proceedings after it was recently blocked by the Tax Administration due to a tax debt exceeding 9.4 million kuna. The price of that stock plummeted nearly 30 percent, to 240 kuna, with a turnover of 816.6 thousand kuna.

A significant price drop of 15.2 percent was also recorded by Dalekovod, which proposed a recapitalization as part of its restructuring, which would occur at a significantly lower price than the current market price of the stock, excluding the preemptive rights of existing shareholders.

Other stocks of construction companies also came under selling pressure, with the stocks of Tehnika and Viadukt dropping about 5.7 percent, and Ingra 4.7 percent.

“I expect a similar sentiment in the domestic market as yesterday – the Crobex indices could be in the red, and construction stocks, especially IGH due to the initiation of pre-bankruptcy settlement proceedings, could be in the greatest focus,” says Ana Franin, financial analyst at Raiffeisenbank Austria.

However, she adds that the price declines could be smaller than yesterday.

Encouragement is also lacking from global markets. On Wall Street, stock indices remained almost unchanged on Monday as investors fear a correction in stock prices after a strong rise since the beginning of the year.

The Dow Jones fell by 0.12 percent, to 15,335 points, while the S&P 500 slipped by 0.07 percent, to 1,666 points, and the Nasdaq index by 0.07 percent, to 3,496 points.

In the first part of trading, the Dow Jones and S&P 500 indices reached new record levels, thanks to acquisition announcements, such as Yahoo’s offer of 1.1 billion dollars to purchase Tumblr.

However, later, due to a lack of new macroeconomic data and company news, the indices lost their initial gains.

In Asian markets, stock prices slightly fell this morning, as well as in European markets, as there are no news to encourage investors, while speculating whether the U.S. central bank will continue to pursue a very loose monetary policy.

“The most important stock indices are at record levels, so investors are prone to profit-taking, therefore the indices are likely to correct somewhat,” concludes Franin.