SEE Markets

SEE Markets uneasy amid high volatility

From 17-21/01/2021


South East European markets were mixed this week, affected by geopolitical tensions over Ukraine and as and expectations grew that the European Central Bank (ECB) would raise interest rates this year.

Stocks in Romania led the losses in the region as world markets also remained uneasy regarding the ultimate impact on the economy of more aggressive monetary policy tightening to combat persisting inflation pressures.

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Greek stock market returns were negative for the week with Athens Exchange (ATHEX) general index falling 0.73%. On Friday (Jan. 21) Eurostat data showed that Greece posted the highest debt-to-GDP ratio in EU in Q3 2021 (200.7%), followed by Italy (155.3%), Portugal (130.5%), Spain (121.8%), France (116.0%), Belgium (111.4%) and Cyprus (109.6%), Eurostat data showed.

Last week, Fitch Ratings revised Greece’s outlook to “Positive” from “Stable”, although it kept the country’s rating at “BB”, two notches below investment grade. The agency saw a debt ratio at 198.4% in 2021, against 206.3% in 2020, declining further to 190.3% this year and to 185.3% by end-2023.


Equities in Serbia as measured by the BELEX15 index returned 4.01%. In debt market news, Serbia sold 9.92 billion dinars (84.4 million euro) worth of two-year Treasury bonds which mature on January 20, 2024, at an auction held on Tuesday (Jan, 18), the finance ministry. The yield came in at 2.75% and demand for the government debt paper stood at 9.92 billion dinars, or 16.54% of the notes issued. Separately, the ministry said that Serbia issued 69.5 million euro ($79.3 million) worth of five-year, 10-year, and 12-year bonds to cover court-approved property restitution claims.

On the macro front, the Serbian financial sector expects 4% inflation at end-2022, the central bank said. On the banking front, bank loans in the country increased by 9.7% in 2021. In other news, Serbia revoked all licenses for international mining giant RioTinto’s $2.4bn Jadar lithium project in the Balkan country, the premier told a press conference on Thursday (Jan. 20).


Romanian stocks sank this week. The main index of the Bucharest Stock Exchange (BVB), the BET, returned -6.17% leading the losses in the region. The BVB lost 5.09 billion RON (about 1 billion EUR) in capitalization this week, according to the data published by BVB.

Romania tapped international markets on Wednesday (Jan. 19) with two USD-denominated bond issues, maturing in five and ten years, respectively.

On the banking front, the country’s banking sector profitability fell to 8.26% in 2020, from 11.06% in 2019, being the first time the local banking sector profitability was below 10% in the last six years, according to the 11th edition of the McKinsey Global Annual Banking Review.

In other news, Romania posted EU’s lowest rise in house prices in Q3 2021 according to Eurostat data.

BET index
(Bucharest Stock Exchange BET index led the losses in the region)


Slovenian markets posted a weekly gain. The blue-chip SBITOP index added 0.61%. In economic news, Slovenia’s consumer confidence indicator remained the same on a monthly basis in January, while it increased by five percentage points year-on-year, the country’s statistical office Sistat said.

In a separate release, Sistat said that last year producer prices went up by 10.6% while the average annual growth 5.5%. On the construction front, Slovenia posted EU’s steepest annual fall in construction output in November, Eurostat data showed while Slovenia’s building permits rose 17% in 2021.


Cypriot equities were higher. The Cyprus Stock Exchange General Index returned 0.53%. Last week, Cyprus successfully issued an oversubscribed ten-year Eurobond for EUR1 billion at an interest rate of one percent. International bids stood at EUR 7.8 billion pushing the interest down from a maximum of 1.10% set by the Ministry of Finance.

“The bond aims at strengthening cash reserves, to meet the financial needs of the Republic (of Cyprus) both in terms of debt maturities and fiscal spending,” the Public Debt Management Office (PDMO) said.


Shares in Montenegro ended lower with the MNSE10 returning -0.43%. On the macro front, Montenegro’s consumer price inflation stood at at 2.4% in 2021 from 0.3% deflation in 2020, according to the national statistical office. In 2021, industrial producer prices increased by 1.3% in the country.


Bosnian stocks extended their losses this week. The SBITOP index slumped 2.14%. In economic news, Bosnia’s registered jobless numbers fell 8.5% y-o-y in November 2021 while the average net monthly salary went up by 5.9%. The country’s trade gap widened 15% in 2021 while indirect tax revenue increased by 17% during the same period, official data showed.


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Bulgarian stocks finished with solid declines. The SOFIX index plunged 2.56%. On the macro front, Bulgaria’s annual inflation rate surged to 7.8% in December of 2021 from 7.3% in the previous month. It was the highest inflation since December of 2008.  In debt markets news, Bulgaria aims to tap domestic and international markets to borrow up to 7.3 billion levs ($4.23) part of which will go to refinance a bond issue, according to Finance Minister Assen Vasilev. Meanwhile, the Bulgarian government projects up to 4.1% deficit in 2022 draft budget and targets 5% economic growth this year. In other news, net foreign direct investment flows into the country dropped 47% in the January-Novemver 2021 period, central bank data showed.


Equities in Croatia as measured by the CROBEX index dropped 0.31%. Despite the weekly decline, the blue-chip index which has been rising since the start of the year- hit the highest level since February 2017 for the second day in a row on Wednesday (Jan.19), reaching 2,213.26 points. On Tuesday (Jan. 18) it reached 2,201 points. In economic news, Croatia will quote prices in both kuna and euro as of Sept 5, 2022 through the whole of 2023, Finance Minister Zdravko Marić announced on Monday (Jan. 17).

Croatia’s central bank lifted 2022 inflation forecast to 3.5-4% basing its projection on higher-than-forecast inflation rates in November and December 2021 and the assumption that gas and electricity prices will rise considerably as of April 1. The unemployment rate fell to 7.4% in December of 2021 from 9.5% in the corresponding month of the previous year, Croatian Bureau of Statistics data showed.

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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.

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