ZSE: Continued Sharp Decline of Agrokor Companies’ Shares

On the Zagreb Stock Exchange on Tuesday, the sharp decline in the share prices of companies within the Agrokor group continued, after Moody’s downgraded the rating of the conglomerate again yesterday, resulting in these companies losing between 36 and even 69 percent of their market capitalization since the beginning of March.

The Crobex index was down 1.11 percent around 11 a.m., at 1,918 points, while Crobex10 was down 0.85 percent, at 1,124 points.

Regular trading in shares reached 4 million kuna.

A million kuna turnover was recorded only for the shares of Ledo, at 1.44 million kuna. Its price plummeted nearly 20 percent, to 3,000 kuna.

Since the beginning of March, due to a series of bad news related to illiquidity, the inability to settle supplier claims, and the arrival of an extraordinary commissioner at the helm of Agrokor, the price of that share has collapsed by 68.4 percent, meaning the market capitalization of that company has decreased by more than three times.

The market capitalization of Jamnica has been cut by the same amount, with its price today dropping 22.3 percent, to 50,101 kuna. Since the beginning of March, its price has plummeted by 69 percent.

The share of Belje is down 21.27 percent today, trading at 9.33 kuna. This is a 57.6 percent lower price than at the beginning of March.

The share of Zvijezda recorded a loss of nearly 17 percent today, trading at 1,551 kuna, which is 58 percent lower than at the beginning of March.

The share of Vupik, which has shown extremely volatile movements during this period, is down 29 percent today, at 23.45 kuna, and is down 36 percent since the beginning of March.

“Great Uncertainty”

“The news coming one after another from the Agrokor conglomerate shows that all doubts are being confirmed – it is actually unknown how much Agrokor is currently in debt, how many loans it has, and to whom.

Moody’s made a logical step by further downgrading the conglomerate’s rating,” says Roman Rinkovec, a broker at the investment company Credos.

On Tuesday, Moody’s downgraded Agrokor’s credit rating by one notch, from Caa1 to Caa2, and raised the probability of its bankruptcy from Caa1-PD to CA-PD, maintaining negative outlooks.

As they explained, the decision to downgrade Agrokor’s rating reflects its application for restructuring under Croatian law, which in their opinion makes bankruptcy very likely.

“Since we do not know the true situation in the conglomerate, there is great uncertainty. To even talk about where all this will end is misplaced – only speculators or ‘insiders’ are trading Agrokor shares now. Most investors have no insight into the state of affairs, so they do not even attempt to trade those shares until more reliable information arrives from the system itself,” Rinkovec states.

As he pointed out, the prices of Agrokor companies’ shares will depend on further news that will arrive. “The only certainty is that uncertainty will last for some time in the market,” concludes Rinkovec.

Reflecting on the decline in the prices of Agrokor’s shares on the Zagreb Stock Exchange, the extraordinary commissioner for Agrokor, Ante Ramljak, said on Tuesday that the value of shares depends on investor confidence and that it will be seen in a few days how they will behave.

Agrokor companies’ shares are in the biggest decline, but the market under their pressure is deeply in the red zone. Since the beginning of March, the Crobex index has plunged 13 percent, and Crobex10 by 12 percent.

In terms of price increases during the morning, only the shares of Viadukt stand out, up 5.18 percent, Excelsa real estate, up 4.7 percent, and Atlantska plovidba, up 2 percent.