Can Crobex Return Above 1,800 Points Today?

Currently, there are no significant news on the Zagreb Stock Exchange that would encourage Crobex to return above the psychologically important level of 1,800 points, below which it dipped for the first time since the end of June on Monday.

Of the 7 analysts from brokerage firms who participated in Hina’s survey, 5 expect Crobex to stagnate today, while 2 expect a decline.

On Monday, the Crobex index slid by 0.55 percent to 1,794 points, dipping below the 1,800-point level for the first time since June 27. The Crobex10 index weakened by 0.19 percent to 1,003 points.

The regular trading volume amounted to 5.1 million kuna, which is approximately 2.5 million less than the previous trading day.

Only the HT stock achieved a million kuna turnover, with its price falling by 1.51 percent to 170.14 kuna.

On the other hand, the INA stock strengthened by 3.13 percent to 3,940 kuna, recovering part of the losses from last week.

 - The low turnover in the domestic market on Monday was partially due to the extended weekend caused by yesterday’s holiday. Meanwhile, Crobex fell below the psychologically important level of 1,800 points, which was anticipated, given that it had stagnated for days with a negative sign – says Roman Rinkovec, an independent stock market analyst.

He adds that since the beginning of the year, Crobex is up just over three percent.

 - The gain of Crobex since the beginning of the year is increasingly dwindling, and it is now at the level of annual inflation – notes Rinkovec, who sees no reason for a market recovery in the short term.

He adds that yesterday the IMF lowered its previous estimate of the decline in Croatia’s GDP this year from 0.2 to 0.6 percent.

 - The IMF’s downgrade of economic forecasts is not good news. Therefore, today I expect stagnation of Crobex; the question is only whether it will be with a negative or positive sign – states Rinkovec.

On foreign exchanges, the focus is on the political crisis in Washington related to the fiscal situation. On Tuesday, stock prices on Wall Street sharply fell, with the Dow Jones dropping by 1.07 percent, while the S&P 500 slid by 1.23 percent, and the Nasdaq index fell by 2 percent.

It has been exactly a week since U.S. government services have been closed, and Republicans and Democrats in Congress have not moved from a deadlock regarding the budget.

The deadline for an agreement on increasing the debt ceiling is in eight days, and if Republicans and Obama do not reach an agreement by then, the U.S. government will not be able to meet all its financial obligations on October 17, which would severely shake financial markets.

Asian and European exchanges are still under pressure because of this.

 - After yesterday’s sharp decline, it is possible that the market will stabilize today. However, the focus remains on the situation in the U.S. regarding the budget and debt ceiling. Most investors hope that an agreement will be reached by October 17 to avoid a financial collapse in the U.S. – says Rinkovec.

On the domestic market, the focus for investors could be on the Adris stock, after the European Parliament yesterday adopted a proposal to amend the tobacco directive. Among other things, it proposes introducing a transitional period of eight years for the ban on menthol cigarettes, while cigarettes with other added flavors should be banned.

The weekly magazine Globus reported that Adris, which offered 234 million euros, and Polish PZU, with a total offer of 171.5 million euros, will enter the second round of privatization and recapitalization of Croatia osiguranje.

In the second round for the privatization of Hrvatska poštanska banka, Erste Bank, which made the highest offer of 130 million euros for 99 percent of the shares, and Hungarian OTP Bank could enter.

According to the magazine, the government could present offers for these companies at a meeting this or next week and invite the mentioned four companies to submit final offers.

Among the news, it is noteworthy that the Settlement Council of Fina postponed the hearing in the pre-bankruptcy settlement procedure for Ingra, scheduled for Friday, October 11, where creditor claims were to be determined. The hearing was postponed at Ingra’s request, as stated, to determine the position and legal capacity of certain creditors. A new hearing will be scheduled later.