SEE Markets

Stocks in SEE post gains despite geopolitical tensions

From 10-14/01/2022


Trading in the stock markets of South East Europe in the second week of January was marked by increases in the leading share indices, despite investors monitoring the spat between Russia and NATO, on one hand, and the looming threat of inflation getting too high, on the other. Greece’s ATHEX index led the gains returning 4.73%.

Meanwhile, the World Bank lowered Eastern Europe’s growth forecast. In the near term is projected to halve from 3.1% in 2021 to 1.4% in 2022, and then forecast to rise to 3.2% in 2023, assuming geopolitical tensions do not escalate further.

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Greece’s stock market returns were positive for the week. The Athens Exchange (ATHEX) general index increased 4.73% bringing year-to-date cumulative gains to 6.27% On Wednesday, the index closed at 950.38 points, a level unseen since 2014. The impressive rally came following an HSBC report recommending the purchase of Greek bank stocks, seeing great potential for cash flow in the local market. Of note, the ATHEX Group signed a framework agreement for the admission to trading, clearing and settlement of Bulgarian derivatives. On the macro front, Greece’s consumer price index rose 5.1% year-on-year in December, data from the Hellenic Statistical Authority showed on Thursday.

South East Europe stocks
(Greece’s ATHEX index led the gains in the region this week)


The Belgrade Stock Exchange (BELEX) benchmark BELEX15 index was 0.30% higher over the period.  In currencies, the Serbian dinar’s official median exchange rate against the euro was 117.5836 dinars for one euro on Friday. The Serbian currency is steady against the euro m-o-m, y-o-y and relative to the beginning of the year. Meanwhile, Serbia’s gross foreign exchange (FX) reserves stood at 16.45 billion euros last month, up by 1.4 million euros compared to November, National Bank of Serbia (NBS) data showed. On the monetary policy front, the NBS Executive Board on Thursday held its benchmark interest rate unchanged at an all-time low of 1% as widely expected. The headline inflation rate jumped to an eight-year high of 7.9% in December, well above the central bank’s target of 1.5%-4.5%.


Stocks in Romania as measured by the Bucharest Stock Exchange (BVB) BET index gained. The blue-chip index returned 3.99%. The National Bank of Romania (BNR) added to a series of interest rate hikes around central Europe, as inflation runs above forecasts.
The central bank raised its benchmark interest rate by 25 bps to 2%. The country’s annual inflation rate accelerated to 8.2% last month after having entered a slightly downward trend in November, edging down to 7.8% from 7.94% in October, data from the country’s statistics institute showed on Friday. According to BNR’s current assessments, the annual inflation rate is likely to rise gradually over the months ahead.


Slovenia’s market closed in green as of Thursday’s close. The SBITOP index was up 1.25%. In other news, the country’s current account surplus dropped to 1.6 billion euro ($1.8 billion) in the January-November 2021 period, from 3.3 billion euro in the same period in 2020, preliminary central bank data showed.
The government decided to increase the minimum gross monthly wage by 4.9% to 1074.43 euro ($1230.64) as of January 1,2022. The increase will be equal to the rise in consumer prices in 2021,
The lowest gross hourly wage will amount to 6.17 euro after the day of publication of the resolution in the Official Gazette of the Republic of Slovenia, the government said in a statement earlier this week.


Equities as measured by the Cyprus Stock Exchange General Index returned 0.70%. Cyprus is expected to introduce a national minimum wage by the end of the month.  According to Kathimerini Cyprus, the national minimum wage will be set at  45% – 60% of the national median salary in Cyprus which is 1573 euros. On the banking front, Non-performing loans in the island decreased by €722 million at the end of the third quarter of 2021, down 14.4% q-o-q, Central Bank of Cyprus (CBC) data showed. However NPLs that have been transferred off the banks’ balance sheets continue to weigh on the real economy.


Stocks in Podgorica as measured by the MBI 10 index closed up 1.51%. On the macro front, the country’s unemployment rate 24.7% in December from 24.12% in November, the Statistical Office said. On the bright side, Montenegro’s net Foreign Direct Investment inflow increased 8.2% y-o-y in the first ten months of 2021, official data showed.


The Sarajevo Stock Exchange (SASE) SASX10 index slumped 2.22%. The turnover on the Sarajevo Stock Exchange this week amounted to 260.805,78 KM. A total of 21.964 securities were traded in 66 transactions. Of note, trading turnover on SASE fell to 321.1 million marka ($186.3 million/164.2 million euro) in 2021, compared with 541 million marka reported for 2020, as all share indices rose, the bourse said.


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Stocks in Sofia as measured by the SOFIX index gained 0.54% over the week . As mentioned earlier, the Bulgarian Stock Exchange (BSE) and ATHEX Group signed a framework agreement for the admission to trading, clearing and settlement of Bulgarian derivatives  The scope of the agreement includes the introduction of single stock futures having as underlying selected stocks traded at BSE and index futures, having as underlying the main BSE index SOFIX. The products are planned to be traded on the derivative market of the Athens Stock Exchange and the clearing to be provided by ATHEXClear.


The Zagreb Stock Exchange CROBEX index rose 0.62% on Friday to end at 2,171.46, its highest level since February 2017, according to the bourse’s data. The main equity index returns were positive over the week. Croatia lifted its 2022 inflation forecast to 3.5% due to rising food and energy prices, finance minister Zdravko Maric said on Thursday. He also said the December annual inflation rate could top 5%. The statistical office of Slovenia is due to release inflation data for December on January 17.

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Kyriaki Balkoudi is a markets editor for World Markets Daily. She has a bachelor’s degree in Balkans Studies from Aristotle University of Thessaloniki, Greece and a master’s degree in International Politics from City University London, UK.