‘As things stand now, May will be by far the worst month’

While leading global stock indices are breaking records almost daily, the Crobex indices on the Zagreb Stock Exchange have been unable to shake off negative sentiment for some time now, with trading volumes decreasing every day, and a similar trend is expected today.

All 7 analysts from brokerage firms who participated in the Hina survey expect stagnation of the Crobex today.

The Crobex has been in the red for the sixth trading day in a row – it fell by 0.36 percent yesterday, to 1,879 points, the lowest level since mid-January.

Crobex10 weakened by 0.40 percent, to 1,067 points, marking its lowest level since early February.

The highest turnover was recorded by the shares of Jadranska banka, amounting to 900 thousand kuna, with its price remaining at 1,000 kuna.

The price of HT shares also remained unchanged, closing the day at 211 kuna, with a turnover of 804 thousand kuna.

In the construction sector, shares of the Institute IGH fell by 4.17 percent yesterday, while Ingra dropped by 5.80 percent. Conversely, the price of Dalekovod shares rose by 1.78 percent yesterday. Dalekovod also announced on the Stock Exchange that its Supervisory Board discussed a received binding offer for recapitalization on behalf of the company Konsolidator, which is majority-owned by Nexus Private Equity Partners. The Supervisory Board and Management of Dalekovod discussed the offer but did not make any decisions, instead requesting additional clarifications and information from the bidder, so the discussion will continue at the next Supervisory Board meeting on May 27.

“As in previous days, I expect low trading volume today as well. As things stand now, May will be by far the worst month in terms of liquidity since the beginning of the year. Our expectations were higher given the good start to the year. The Crobex could stagnate today, as it is evident that it lacks the strength to rise, even though indices on foreign exchanges are breaking records daily,” says Matko Bošković, director of the Investment Banking Division at Centar bank.

On Wall Street, the Dow Jones and S&P 500 indices reached new all-time highs on Tuesday, as fears of the U.S. Fed’s monetary stimulus measures being withdrawn eased following statements from Fed officials. The Dow Jones strengthened by 0.34 percent, to 15,387 points, while the S&P 500 rose by 0.17 percent, to 1,669 points, and the Nasdaq index increased by 0.16 percent, to 3,502 points, the highest level since October 2000.

In recent weeks, the most important question among investors has been whether the U.S. central bank will reduce or even completely eliminate its programs for purchasing government and mortgage bonds, through which it injects $85 billion of fresh, cheap money into financial markets each month.

Investors were somewhat reassured yesterday by William Dudley, president of the New York Fed, who stated that he is unsure whether the central bank will reduce or increase the amounts for bond purchases, given the uncertain economic outlook. Today, all eyes are on the anticipated appearance of Fed Chairman Ben Bernanke in Congress.

On most Asian exchanges, stock prices rose this morning, thanks to new records set by the Dow Jones and S&P 500 indices on Wall Street and the confirmation from the Japanese central bank that it will continue to pursue a very loose monetary policy. Caution prevails in European markets this morning.

“While speculation about corrections continues on foreign exchanges, the most important indices are still on the rise. If that rise were explosive, we would be cautious, but as long as the indices are gradually increasing, it is not alarming. However, it is worth noting that technical signals have been indicating overbought conditions in the most important foreign exchanges for some time now,” Bošković points out.

On the domestic market, however, Bošković does not expect a strengthening of trading volumes and indices in the near future.

“Summer is ahead of us, when trading volumes typically weaken. After last week’s sharp correction in the share price of Ericsson Nikola Tesla due to the expiration of the right to participate in the dividend payout, and the sharp correction in share prices in the construction sector due to announced restructurings and the initiation of pre-bankruptcy settlements, we also have the ex-dividend date for HT coming up in June,” concludes Bošković.