Investors Seeking Signals of Stronger Ambition in Reform Implementation

In the absence of encouraging business news, the Zagreb Stock Exchange is expected to continue the stagnation of the Crobex and weak trading today, with investors focusing on the guidelines of fiscal policy and reforms that the government intends to implement.

All 7 analysts from brokerage firms who participated in Hina’s survey expect stagnation of the Crobex today. The Crobex index broke a 3-day negative streak yesterday, strengthening by 0.24 percent to 1,822 points.

Crobex10, on the other hand, fell for the third consecutive day, by a slight 0.04 percent to 1,026 points. Regular trading in shares amounted to 7.2 million kuna, which is one million kuna more than the previous day.

The only share with a million kuna turnover was HT’s share, which weakened by 0.18 percent to 174.18 kuna, with a turnover of 1.55 million kuna.

Thanks to a 5.2 percent increase in the BDI freight index to 2,127 points, shares of shipping companies were among the biggest gainers.

The price of Atlantska plovidba jumped by more than 7 percent, Jadroplov by 5.4 percent, Tankerska plovidba by 2.6, and Uljanik plovidba by 1.9 percent.

However, the biggest increase was recorded by Varteks shares, which rose by 11.63 percent.

Media speculation that Agrokor will have to sell a significant part of the Mercator chain stores to meet the criteria of the Competition Protection Agency for the approval of the concentration of Agrokor and Mercator negatively affected the shares of some Agrokor companies: Belje shares weakened by 3.5 percent, Zvijezda by 2.2, and Vupik by 1.1 percent.

 - Investor activity remains weak, and there are almost no fluctuations in stock prices. This is indicated by the movement of the Crobex since the beginning of September – without stronger fluctuations, it is now down 1.3 percent. The average daily turnover is slightly below 10 million kuna, and weaker than in the same month last year – emphasizes Tamas Nagy, a broker at Erste&Steiermaerkische Bank.

Investors were focused on shipping shares yesterday, thanks to rising freight rates due to strengthening global demand for bulk shipping, Nagy notes.

 - Today I expect the continuation of Crobex stagnation and weak trading volume – says Nagy.

Analysts in Hina’s survey also point out that investors will monitor today’s announcement of the fiscal policy guidelines from the Ministry of Finance, in search of signals of stronger ambition in reform implementation.

On foreign exchanges, the focus is on the deadlock in the budget discussion in the U.S. Congress, which prompts investors to exercise increased caution.

By the end of September, Congress is expected to approve funding for federal agencies to avoid their shutdown, while by October 17, it should support the proposal to increase the level of allowed government borrowing so that the government can meet all its financial obligations.

However, Congress has found itself in a deadlock as Republicans seek significant cuts in budget expenditures, primarily for ‘Obamacare’, President Barack Obama’s health program, to support the increase in the level of government borrowing, which Democrats do not agree to.

As a result, stock prices on Wall Street fell for the fifth consecutive day on Wednesday, which has not been recorded since the end of last year. The Dow Jones weakened by 0.40 percent, while the S&P 500 slid by 0.27 percent, and the Nasdaq index by 0.19 percent.

Trading on Asian and European exchanges this morning is also cautious.

 - On foreign exchanges, a continuation of uncertainty regarding the U.S. budget and borrowing limits is likely, and in the coming weeks, the focus will be on corporate earnings for the third quarter – concludes Nagy.