ZSE: There Are No Drivers for Increased Activity in the Market

With very low trading volumes, typical for this time of year, the Crobex indices fell last week on the Zagreb Stock Exchange, and in the absence of corporate news, movements in the index are expected to remain within a narrow range in the coming days.

The Crobex index fell by 1.43 percent last week, to 1,827 points, while Crobex10 decreased by 1.09 percent, to 1,029 points.

Regular trading volume amounted to 24 million kuna, which is approximately 21 million less than the previous week. An additional 6.8 million kuna was achieved through a block transaction of AD Plastika shares.

In regular trading, the highest turnover was achieved by HT shares, amounting to 5.4 million kuna, with a price drop of 0.97 percent, to 173.20 kuna.

Following in turnover is the share of Ericsson Nikola Tesla, with 2.7 million kuna, and a price decrease of 1.66 percent, to 1,500 kuna.

More than 1.7 million kuna in weekly turnover was achieved by Valamar Adria Holding shares, whose price fell by 2.09 percent, to 163.10 kuna.

A price drop of 0.66 percent was also recorded for Končar Elektroindustrije shares, to 711.01 kuna, with a turnover of 1.3 million kuna.

A turnover of around 1.3 million kuna was also recorded for the preferred shares of Adris Group, which saw a price drop of 1.24 percent, to 282 kuna.

“Last week, which was shortened due to the holiday, was marked by a decline in the index for four consecutive days, continuing the negative sentiment from the end of the previous week. As expected, extremely low trading volumes typical for this period were recorded. A poor week on the domestic stock market can partly be attributed to the spillover of negative sentiment from foreign exchanges, where investors were cautious following statements from Fed officials that the bond-buying program, worth 85 billion dollars monthly, could be reduced as early as September,” emphasizes Ana Vitaić Gladović, an analyst in the Economic Research Department of Hypo Alpe Adria.

Mixed domestic macroeconomic indicators do not support the stock market either.

“Midweek, data was released showing a higher than expected increase in retail sales in June; however, this did not impress investors. Given the unfavorable outlook related to the labor market and the trend of deleveraging among the population, it is unrealistic to expect further consumer optimism, and thus a continuation of such retail growth. Additionally, at the end of the week, data was released showing a significant increase in the foreign trade deficit due to a substantial rise in imports accompanied by a decline in exports,” notes Vitaić Gladović.

In June, retail trade in Croatia increased by 2.7 percent year-on-year, according to data from the Croatian Bureau of Statistics, marking the second consecutive month of growth, exceeding expectations.

Four macroeconomists who participated in a Hina survey expected an average consumption growth of 0.3 percent in June compared to the same month last year.

Croatia’s commodity exports in the first six months of this year, expressed in kuna, fell by 4.4 percent, while expressed in euros, it decreased by 4.7 percent compared to the same period last year, while at the same time, imports in kuna increased by 0.1 percent, and in euros, it decreased by 0.2 percent, according to DZS data.

The total deficit in Croatia’s foreign trade amounted to 28.5 billion kuna, or 3.8 billion euros, and increased by 5.8 percent in kuna and 5.5 percent in euros compared to the deficit from the first six months of last year.

Last week, the government announced a call for expressions of interest and the collection of non-binding offers for the sale of part of its total 80.2 percent ownership stake in CO, ensuring that after the transaction is completed, it retains at least 25 percent plus one share, or a maximum of 30 percent of the shares of the capital-enhanced CO.

Media reports that KPMG, the consulting firm hired by the government to assess the value of CO, determined that the company is worth 210 million euros, meaning that by selling 42 percent of the company, the government could earn around 90 million euros.

Additionally, it announced a call for expressions of interest and the collection of non-binding offers for the sale of 99.13 percent of the shares of Hrvatska poštanska banka (HPB).

The regular share of Croatia osiguranje recorded a price drop of 5.21 percent, to 6,729 kuna, with a turnover of nearly one million kuna. There was no trading in Hrvatska poštanska banka shares.

“We are facing another shortened working week, so we can expect similar levels of turnover in the domestic stock market. In the absence of corporate news and market triggers, we can expect the index to continue moving within a narrow range,” concludes Vitaić Gladović.