Commentary
The spring woke up the bulls on the BSE
The beginning of the spring came along with moderate optimism and start of the awakening of the bullish investors on the BSE, even though the trading in the last five working days was accompanied by considerably lower volume than the average for the past months. The average daily turnover for the week was approximately BGN 5.7 mln, excluding the block trade from Thursday (March, 27th) at the value of BGN 14.1 mln, through which 28 % of the capital of Kauchuk AD [KAU] was transferred.
The passive behavior of the investors was most obvious on Friday, when shares for just BGN 3.7 mln. changed hands and both indices increased moderately - by 0.07 and 0.20 % respectively. Despite the low turnover, the week ended with the biggest increase since the beginning of the year – 5.2 %, and 35 out of 40 of the companies in the broad index BG 40 ended on positive territory.
The start of the week was critical for the investors in Bulgarian shares and as a result of the panic sell-offs in the first hour and a half of the Monday trading session, the narrow index collapsed by 3.5 % to its lowest level for the past 16 months - 1 140 points. The irrational behavior of the speculators on the Bulgarian Stock exchange, which led to new 8-10 % losses for most of the ‘blue chips’, logically provoked the buyers who supported the market in the second half of the trading session and as a result the main index recovered its positions and ended the day with a positive sign. In the next few weeks it will become clear if the appreciation of the shares during the last few days was provoked by the return of optimism among the investors or is a part of a temporary correction of the downward trend we have been observing for more than 5 months already.
On Tuesday the trading with the shares of the cosmetics company Astera AD [AST] started. The expectations of the market players came true and the offered issue did not attract the investors’ interest, as for the four trading sessions only 405 shares were traded at a price in the range of BGN 8.00 and 9.60 per share, which values the company between BGN 13.6 and 16.4 mln.
The report also includes:
market Trends
SOFIX (chart)
BG40 (chart)
market Statistics
| Segment | Volume (BGN) | Deals |
| Trading in Equities | 42 932 486.76 | 9163 |
| Weekly Chng | 2.33% | 26.15% |
| Trading in Corp. Bonds | 1 555 476.57 | 32 |
| Weekly Chng | -73.63% | 28.00% |
| Block Trading, Equities | 14 079 710.61 | 281 |
| Weekly Chng | 22.70% | -9.06% |
| market Capitalization: | BGN 23.59 bln / EUR 12.26* bln |
* The Bulgarian Lev is pegged to the Euro at BGN 1.95583 per EUR 1.00.
BG40 Stocks, March 21, 2008 (table)
Gainers & Losers*
| TOP GAINERS | Ticker | Sector | Weekly Chng |
| Kauchuk AD | KAU | rubber products | + 29.93% |
| Zarneni Hrani Bulgaria AD | ZHBG | agriculture | + 25.37% |
| Sparky Eltos AD | ELTOS | machinery | + 21.43% |
| TOP LOSERS | |||
| A.V. Buildings AD | AVBLD | construction | -15.45% |
| Pleven BT AD | PLEBT | tobacco | -10.15% |
| Balkan AD | BALKL | machinery | -8.97% |
* Gainers: Among shares with turnover above BGN thnd 50; Losers : Among shares with turnover above BGN thnd 20
Main Economic Indicators
| 2004 | 2005 | 2006 | |
| GDP, in bln EUR | 19.57 | 21.45 | 25.10 |
| GDP, real growth, % | 6.6% | 6.2% | 6.1% |
| Inflation, year-average, % | 6.2% | 5.0% | 7.3% |
| Unemployment, year-average, % | 12.0% | 10.1% | 9.0% |
| Fiscal Balance, % GDP | 1.7% | 2.3% | 3.7% |
| Gross Public Debt, % GDP | 43.2% | 33.4% | 25.5% |
| Current Account, % GDP | -6.7% | 12.2% | -16.3% |
| Foreign Direct Investment, % GDP | 14.0% | 14.5% | 16.8% |
Yield Curves: Bulgaria vs. Eurozone (chart)
East European Markets
| index | Value | Weekly Chng | YTD Chng |
| Bulgaria SOFIX | 1246.97 | 5.19% | -29.47% |
| Croatia CROBEX | 3 881.95 | 1.12% | -25.90% |
| Macedonia MIB-10 | 6 534.18 | 0.68% | -15.59% |
| Montenegro NEX20 | 25 183.28 | -4.16% | -26.30% |
| Romania BET-C | 6 964.38 | 1.56% | -29.12% |
| Russia MICEX10 | 1 627.87 | 3.26% | -13.82% |
| Serbia BELEXline | 1 704.66 | -3.06% | -26.47% |
| Turkey ISE-100 | 40 661.54 | 2.37% | -26.79% |
| Ukraine PFTS | 1 107.47 | -0.21% | -5.67% |
| Morgan Stanley MSCI EE (€) | 601.65 | 2.73% | -17.08% |
news of the week
Economics
- In March 2008 the economic climate in the country remained favorable. The total Business climate indicator increased for a third consecutive month to 0.5 basis points above the February level, the National Statistics Institute (NSI) announced.
- Bulgaria's gross external debt amounted to EUR 27 407.4 mln[83.7% of GDP] at the end of January, down by EUR 716.3 mln [2.5%] compared to the end of 2007, according to data by the Bulgarian National Bank [BNB].
- The Producer Price index [PPI] on the domestic market for February 2008 increased by 13.9 % compared to February 2007, the NSI announced.
Politics
- The Turkish Prime Minister Recep Erdogan paid an official visit to Bulgaria. At the Bulgarian-Turkish Bussiness Forum held at the same time,the two countries declared that the turnover between them will extend to EUR 10 bln. in next few years. It is estimated at EUR 4 bln. at the moment.
- Germany's RWE is expected to become the key investor in the project for the Belene nuclear power plant. Bulgaria plans to build a 2,000-MW NPP, which will make the country the major power exporter in the balkans.
Corporate Sector
- The engineering company Enemona AD[ENM] received a Class A investment certificate for the project for construction of a biomass power plant in Nikopol. The materials which are going to be used for fuel are 90 % straw and 10 % other agriculture waste. The investment is expected to be fulfilled in 3 years and to be at the value of BGN 100 mln. The financing will be provided by own financial resources and debt from international financial institutions.
- Тhe producer of hydraulic motors and servomotors M+S Hydraulic AD [MCH] summons a regular general meeting of the shareholders on 16.05.2008. Buy-back of part of the company shares traded on the BSE is included as a part of the agenda.
- On Friday (March 28) Bulgartabac Holding AD [BTH] and Aidatour Haskovo concluded a deal for the sale of 90.56 % of the capital of Kardjali Tabac Jsc. at the value of BGN 6 013 ths. The minimum price was set at BGN 1 506 ths. Owners of the buyer Aidatour AD are Balkantourist BG and the Turkish citizen Fuat Guven. No one bidded for the company last year when it was first announced for sale.
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