Will Agrokor’s Flagships Continue to Grow?

Today, modest liquidity is expected on the Zagreb Stock Exchange, typical for the beginning of the week, while the shares of Agrokor’s companies may be in focus for investors, after the conglomerate acquired 53 percent of the shares of the Slovenian Mercator.

Of the 8 analysts from brokerage firms who participated in the Hina survey, 6 expect stagnation of the Crobex today, while 2 expect an increase.

The Crobex index fell by 2.61 percent last week, to 1,801 points, while Crobex10 dropped by 3.57 percent, to 1,021 points. During the week, both indices touched new lows since the first half of January.

Regular trading volume amounted to 67.6 million kuna, which is approximately 17 million more than a week earlier.

“The domestic market was very poor last week – indices fell for the sixth consecutive week. Liquidity was somewhat higher than in the previous week, averaging around 35 million kuna per day, but this was mainly due to a block transaction of Rivijera shares, amounting to 114 million kuna,” says Davor Špoljar, senior capital market analyst at Erste&Steiermaerkische Bank.

The shares of Rivijera Adriatica, whose management announced the withdrawal of shares from listing on the stock exchange, achieved nearly 12 million kuna in regular trading, and its price jumped by 7.7 percent, to 14.44 kuna. In a block transaction, more than 114 million kuna was traded in that share.

The most liquid share last week was HT’s, with 18.3 million kuna in trading. Its price plummeted by 12.2 percent, to 182.12 kuna. On Thursday alone, it fell by 10.71 percent, as from that day the share is traded without the right to a dividend for the previous year. A gross dividend of 20.51 kuna per share will be paid on July 8.

Among the losers, the shares of Dalekovod stand out, with a price drop of 15.9 percent, followed by Ingra, 5.8 percent, Podravka 5.4 percent, and Končar Elektroindustrija, 5 percent.

Significant gainers were the shares of Proficija, whose price jumped by 42.3 percent, followed by Dioki, 12.2 percent, and Tehnika, 7.66 percent.

Investor focus was more on shares of tourism companies. Along with the most liquid Rivijera, there was significant trading in Valamar Adriatica shares, whose price rose by 1.57 percent.

At the end of the week, however, the focus of investors was on the issues of Agrokor’s companies, after the first signals that Slovenian companies and banks would sell their stake in Mercator to the Croatian conglomerate.

On Friday evening, Agrokor signed a purchase agreement for 53.12 percent of Mercator’s shares with an ownership consortium of 12 sellers in Ljubljana. They will pay 120 euros per Mercator share, amounting to 240 million euros for 53.12 percent of Mercator’s shares.

Shares of certain companies within Agrokor achieved significant price increases at the end of the week. Thus, the price of Belje shares jumped by 11.12 percent last week, Zvijezda by 6.67 percent, Vupik by 5.38 percent, and Konzum by 3.62 percent.

“Today, I expect modest liquidity, typical for the beginning of the week, with the possibility that some of Agrokor’s shares will be in focus for investors, following the announcement of the acquisition of 53 percent of the stake in Mercator,” says Špoljar.

Some analysts in Hina’s survey also point out that shares of construction companies could be in focus, as the media reports that Hrvatske autoceste have abandoned the construction of the Lekenik – Mošćenica section on the Zagreb – Sisak highway due to lack of funds, and on corridor Vc, the so-called Slavonica, the section from Osijek to Beli Manastir and further to the Hungarian border will be built as a state road, not a highway.

Last week, trading on global stock exchanges was very uncertain due to investors’ fears that the era of extremely loose monetary policy, which leading central banks around the world have long supported capital markets, is coming to an end.

On Wall Street, the Dow Jones index weakened by 1.2 percent last week, while the S&P 500 slid by 1 percent and the Nasdaq index by 1.3 percent. This marks the third decline in the index in the last four weeks.

“Last week was also quite poor on foreign exchanges. In the last four trading weeks, it was the third negative week on Wall Street. The decline in the index is due to concerns about whether loose monetary policy will continue. As a result, volatility measured by the VIX index has also increased,” notes Špoljar.

In the coming days, investor focus will be on monetary policy in the U.S. On Wednesday, following a two-day Fed meeting, the central bank’s chairman Ben Bernanke will hold a press conference.

“On Wednesday, the Fed will meet. It is expected that the Fed will keep interest rates at record lows, but investors will be looking for signals regarding the fate of current monetary stimulus,” assesses Špoljar.