Overview
Shares Hit New Lows
Bulgarian stocks were hit by another wave of selling as negative sentiment dominated the market during the week. The main stock index of the BSE – SOFIX, broke through its recent lows and continued to float down searching for a new bottom. The benchmark index lost 5.31% for the week, swamped by financials and closed at 307.42. The wider BG40 sank under its starting value of 100 and closed the week at 95.92, down 5.80%, while BGTR30 suffered even more severe losses as 7.21% of its capitalization was erased. BGREIT was also slapped and closed the week down 1.69%, dragged down by BenchMark Fund Estates REIT [6BMA; -26.68%], ERG Capital-2 REIT [6ER; -18.18%] and Prime Property BG REIT [4PY; -15.42%], which were traded in relatively high volumes.
Turnover was boosted by heavy trading in companies from the portfolio of Chimimport [6C4], and a possible restructuring in it. Turnover in Zarneni Hrani Bulgaria [T43] and Oil & Gas Exploration & Production AD [4O1], both controlled by Chimimport, together with Odessos Shiprepair Yard AD [5ODE] and Industrial Holding Bulgaria AD [4ID], in which the conglomerate holds minority stakes, totaled BGN 9.4 mln out of a total weekly turnover in shares of BGN 25 mln. Some of the local real estate trusts saw heavy trading too, with Elana Agricultural Land Opportunities REIT [4EC] being the most liquid among them as 3.3 mln of its shares changed hands in a turnover of BGN 2.9 mln.
Financials were definitely on the losing side as stocks of Euroins Insurance AD [5IC] and First Investment Bank AD (FIB) [5F4] posted double-digit losses. The insurance company has shed almost one third of its market cap since the beginning of the year. At the same time FIB tumbled by 44% year-to-date and headed the list of the fallers for the year.
Banks were in focus during the week as Bulgarian American credit Bank [5BN](BACB), Central Cooperative Bank [4CF](CCB) and Corporate Commercial Bank [6C9](CORP) released their annual financial statements. Financial figures revealed a rather mixed performance. On the one hand, all of the banks above posted higher net interest income and earnings, in which were helped by a strong credit growth in the first half of the year. These were accompanied by growing assets and deposits from clients. On the other hand, the deceleration in growth and shrinking profitability that were visible in Q3 statements became even more apparent in Q4 reports.
Bulgaria’s banks are ahead of a challenging year given their dependence on foreign funding and significant capital outflows seen recently. Most of the parent companies of local banks are EU-based financial institutions which had their liquidity improved by a wave of government support packages. Most governments however do not allow banks to use this liquidity outside of their home country. This makes credit growth in Bulgaria entirely dependent on deposits and, consequently, a significant deceleration in it and a further spread compression due to an intensification of competition for funding could be expected
| Value | Weekly Chng | YTD Chng | |
| SOFIX | 307.42 | -5.31% | -14.29% |
| BG 40 | 95.92 | -5.80% | -11.03% |
| BG REIT | 44.28 | -1.69% | -16.69% |
| BGTR 30 | 227.28 | -7.21% | -8.76% |
| Shares Turnover (BGN th) | 25 025.37 |
| Bonds Turnover (BGN th) | 314.24 |
| OTC market Turnover (BGN th) | 1 037.10 |
| Total Turnover (BGN th) | 27 659.97 |
| market Capitalisation (BGN mln) | 10 779.16 |
| market Capitalisation/GDP | 17% |
Trends
SOFIX (chart, table)
BG 40 (chart, table)
Main Economic Indicators (table)
East European Markets (table)
news of the Week
Corporate Sector
- Euroins Insurance Group (EIG), the parent company of Euroins Insurance [5IC], is currently in talks to take over an unnamed Turkish insurer, the group’s executive director Zlatolina Mukova said. EIG is the insurance sub-holding of Eurohold Bulgaria [4EH].
- Bulgarian Aviation Group, part of Chimimport [6C4], has bought 85.25% of air carrier Air Ban from insurer DZI [6D5] for an undisclosed sum, DZI said. Air Ban is licensed to perform flights as part of trade and emergency medical services and owns two Eurocopter BO-105 helicopters.
- The Bulgarian Energy Efficiency Fund (BEEF) [6EE], majority owned by Enemona [E4A], plans to raise BGN 729,000 through a capital hike, the Financial Supervision Commission (FSC) said on Tuesday. The fund will issue 486,000 new shares with face value of BGN 1 and issue price of BGN 1.50. Capital management SPV [5CQ] also plans to raise its capital, seeking BGN 9.35 mln from the market and it will offer for subscription 180,154 new shares with nominal value of BGN 1.00 and issue price of BGN 51.90 each.
- Central Cooperative Bank AD [4CF] on Tuesday reported an annual net profit of BGN 21.5 mln, up by 5.6%. Net interest income (NII) came at BGN 65.2 mln. Loan portfolio increased by 49.2% to BGN 978.8 mln.
- Corporate Commercial Bank [6C9] on Wednesday said its 2008 net income skyrocketed by 74% to BGN 40.3 mln on a 31.7% increase in net interest income (NII) and a 36.9% jump in net fee and commission income (NFCI). The loan portfolio of the bank totaled BGN 1 153.7 mln, vs. BGN 749.8 mln a year earlier.
- Lead & Zinc Complex [5OTZ] has instituted legal proceedings against the Ministry of Environment on grounds of blocking of investments in new capacities and equipment after local authorities in the town of Kardzhali agreed to seek stoppage of the lead production at the plant because of it polluting the air, the board chair of the company's majority shareholder Intertrust, Valentin Zahariev said on Thursday. The company has said it plans to invest EUR 60 mln to increase the capacity and to solve ecological problems of the plant.
Economy and Politics
- The European Commission (EC) sees Bulgaria's GDP growth slowing to 1.8% in 2009, mainly due to lower external demand and tighter credit conditions, the EC said in its report. Bulgaria’s GDP is projected to grow by 6.5% in 2008 and by between 2.1% and 4.7% in 2009, according to the government’s projections.
- Bulgaria cancelled the restrictions on gas supplies to households and enterprises on Wednesday after Bulgaria started receiving natural gas from Russia via Ukraine in the evening of January 20th. The gas crisis, which prolonged for more than 15 days and caused losses to local companies worth some BGN 180 mln, broke out because of a conflict between Russia and Ukraine on the conditions of gas deliveries. Bulgaria plans to seek from Russia's Gazprom either direct financial compensations or deliveries of gas at a discount price, Economy Minister Petar Dimitrov said on Friday.
- Bulgaria attracted some EUR 6 bn in foreign direct investments last year, down from a record high of EUR 6.5 billion euro in 2007, the head of the government's investment promotion agency InvestBulgaria, Stoyan Stalev, said on Thursday quoting preliminary estimates. In the meantime it was announced that the government plans to cut the requirement for the amount invested by companies in order to receive preferential treatment from the state to BGN 30 mln from BGN 70 currently.
- Bulgaria's parliament gave a mandate to the government to start talks with the European Commission on the possible restart of two of the reactors in the Kozloduy nuclear power plant after the country was hit hard by the gas shortage caused by the Moscow-Kiev raw. Bulgaria agreed to close four of Kozloduy's units as a precondition to join the European Union in 2007.
- Bulgaria’s home price index dropped by 4.1% q-o-q in Q4’2008, data from the National Statistics Office indicated. Home prices in the towns of Veliko Tarnovo (-11.7%), Pleven (- 11.6%), Targovishte (-11.2%) and Pernik (-10.3%) fell the most. On an annual basis, however, home prices increased by 24.9% in 2008 as compared to 2007.
BG40 Stocks (table)
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Newsletter Weekly 2009.01.19-23.pdf, 77 Kb
