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Negative correction recorded yesterday on equity indices as a result of lethargic trading
Good morning! Yesterday's trading was marked by a negative correction of stock indices. Both Crobex and Crobex 10 recorded decreases of 0,42% and 0,31% respectively. Total turnover remains relatively modest, amounting to 12,7 million HRK yesterday. Our leading share was again HT, with 3,7 million HRK turnover. Seeing as how yesterday’s trading day didn’t bring us much interesting, today we will have a look at the perspective of capital markets in the coming period. After a positive start to 2010, results have remained fairly steady and if one looks at the contribution from the beginning of the year it is a solid 7,9%. This is extremely positive for the domestic market, because so far we have not yet witnessed the effects of the positive macro news, as well as positive corporate reports. Of course, it should be further pointed out that this yield was achieved almost exclusively on our favorites that is, stocks with quality fundamental value and low betas. In addition to this are dividend yields, which are around the corner for HT and ERNT.
Low interest rates on the money market and the release of liquidity before the takeover of ZAP are what aided the positive performance. The payout of dividends by HT is next on the list, as is the public offering of BLSC which depending on the price may arouse further release of liquidity on the market.
For the end we will look at the announcement of Business results of the Group Medika for the fourth quarter and 2009. According to what the group announced, they are one of the few companies to have achieved revenue growth last year despite the reduction of drug prices by 12%. In 2009 their sales revenues amounted to 2 billion HRK, whereas in 2008 they were 1,9 billion HRK. The EBITDA of the Group grew from 2,82% in 2008 to 2,94% last year, and the EBIT grew from 2% to 2,1%. Finally, the Group recorded a net profit of 16,9 million HRK, which represents a 29,5% increase in comparison to 2008.
After yesterday's lethargy, and the non-existence of any particularly “smart” news, one might say that today we expect quiet trading, however keep in mind that occasionally after these types of days mood swings are known to occur. Be prepared, and have a nice day!
CROATIAN EQUITY market; HIGHLIGHTS
| DOWN | 37 |
| NO CHANGE | 23 |
| UP | 20 |
| TOTAL TRADES | 80 |
exchange RATES (table)
TOP PERFORMERS (table)
CROBEX/ General info/ Change (%)/ Fundamentals (Trailing Basis) (table)
CRO -- Croatia Zagreb CROBEX (charts)
- QUOTE OF THE DAY:
“Many men go fishing all of their lives without knowing that it is not fish they are after.”
Henry David Thoreau
Performance of Crobex10 companies in the last year
Today, we have prepared a review about the companies within the Crobex 10 index and an assessment of how they performed last year. We have excluded IGH Institute and Ingra, because they have not yet released their financial results for 2009. Information regarding operations for these companies are not particularly encouraging because they show negative trends including decreased revenues from sales, operating profitability and net income. The only growth in the reporting period was seen in the total assets category.
Revenues from sales of these companies fell 17,2% last year in comparison to 2008. The cause of the decline in sales revenues is the recession which affected the domestic market as well as the foreign. This is best seen in domestic shipping companies, whose performance is a direct reflection of the foreign crisis. On the whole, EBITDA decreased 6,1% which is proof that the company’s efforts to mitigate the negative effects of falling revenue, is by cutting operating costs. One of the strongest players here, was Končar with growth amounting to 103,6% last year in comparison to 2008. INA also improved profitability by 56,8% despite declining revenue from sales. In addition to Končar and INA, Adris Group and Dalekovod were also able to improve net profits in 2009. Total assets of the Crobex 10 companies increased by 4,1% in 2009. The highest increase in assets was INA by far with 4 billion HRK in the reporting period.
If we draw a positive conclusion we can say that, despite declining sales revenues of 17.2%, it is evident that these companies are behaving rationally, as is indicated by the EBITDA decrease of only 6,1% and net profit by 10,5%. Aside from that, this crunch could enable these companies to operate more efficiently after the recovery of the market because they had to rid themselves of unnecessary costs to stay afloat in this crisis.
Performance of Crobex10 companies (table)
Movements of Crobex10 (chart)
CROATIAN EQUITY market; FUNDAMENTALS OF SELECTED COMPANIES
Selected Croatian Equity Fundamentals (Trailing Basis) & Performance (table)
TECHNICAL OUTLOOK; CROATIAN EQUITY market - CROBEX; daily graphs
CRO -- Croatia Zagreb CROBEX (charts)
Lack of stronger trend
- Today we are looking at weekly CROBEX graphs from 2 perspectives. First one shows narrowing of Bollinger lines (we mentioned this few days ago on daily graph). Second graph shows something similar to rising triangle, but since 2/3 of this pattern have passed and we have not seen an upward breach we can say that this is not a triangle. Resistance around 2.290 is clear, as is support on rising green trend line (we saw something very similar on ERNT weekly graph few days ago). ADX shows lack of real trend. RSI shows negative divergence… for that reason we would be very careful with CROBEX.
Trading suggestion:
- We would be sellers as index nears 2.200/300.
| Technical targets: | |
| 2.290,00 | high on 5/6/09 |
| 2.162,00 | close |
| 2.125,00 | green trend line |
WORLD EQUITY indices - FLASH DATA
General Information/ Index/ Country/ Change (%)/ Fundamentals (table)
Encouragement from FED for investors
After yesterday’s regular meeting, FED officials sent out the message that key interest rates will remain unchanged for some time, which have been at record lows of nearly 0% because inflation is under control. They also sent a message that the Business sector is seeing significantly higher spending on technology equipment and software, and employment is stabilizing although employers are still reluctant to open new jobs. These messages from the FED had a positive effect on the mood of the market, and share prices rose accordingly reaching their highest level in the last 17 months. Standard & Poor’s news regarding its review and ratings of Greece also had a positive effect on the markets as they announced that the government sees the latest measures to reduce the budget deficit as positive. At the same time, Euro zone finance ministers promised financial assistance to Greece, if necessary and concern of investors about the financial problems of Athens are further subsided. Among the biggest winners of the day was Intel with the growth rates of 4%, as a result of publication that the company produced the latest chip for servers before rival Advanced Micro Devices.
INTC US (chart)
TECHNICAL OUTLOOK; WORLD EQUITY indices - S & P; daily graph
1.150 breached
- Today we are looking at daily S & P graph. We want to point out something very important... S & P breached resistance at 1.150 yesterday. This breach can still be just a false break (and double top, which we mentioned few days ago, is still a possibility). index is moving in a rising wedge for some time. Since this pattern did not form at end of an uptrend we think that it is not so bearish. index entered overbought on RSI yesterday, but red trend line is still intact (a breach would be a sell signal). CMCI is also not showing sell signal.
Trading suggestion:
- Few days ago we said that we would be sellers at 1.150. Although RSI and CMCI still are not showing sell signals we would be very careful (in case you are still long).
| Technical targets: | |
| 1.156,00 | close |
| 1.150,00 | high on 11/1/10 |
TECHNICAL OUTLOOK; TRACK RECORD (table)
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IC Croatian Equity Daily 170310.pdf, 501 Kb
