South East European stocks moved higher over another week of persistently high volatility. Efforts to reach an agreement between Russia and Ukraine continued but a diplomatic solution to the conflict did not emerge. However, Russian President Vladimir Putin said Friday “certain positive shifts” have occurred in the talks between the Kremlin and Ukraine. Meanwhile, President Volodymyr Zelenskyy reportedly said Ukraine has reached a “strategic turning point” in its war with Russia.
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Greek stock market returns were positive for the week, ending a two-week decline. The Athens Exchange (ATHEX) general index advanced 0.76%. On the macro front, Greece’s annual inflation rate rose for the tenth consecutive month to 7.2% in February from 6.2% in the previous month. It was the highest inflation rate since December of 1996, the Hellenic Statistical Authority (ELSTAT) announced on Thursday, and it may even rise further according to the Finance Minister Christos Staikouras.
On a weekly basis Serbian stocks advanced 0.76%. In monetary policy news, the National Bank of Serbia held its benchmark interest rate unchanged at an all-time low of 1% during its meeting this week. The decision comes as inflation climbed to 8.8% last month from 8.2% in January, beating market expectations of 8.4%. It was the highest reading since June of 2013, according to the Statistical Office of the Republic of Serbia. Looking ahead, Austrian banking group Erste cut Serbia’s 2022 GDP growth forecast to 4%.
Romania’s benchmark BET index led the gains in the region, jumping as much as 5.96% over the week. The BET index reaches 20 companies for the first time after including Aquila shares. The Index Committee took the decision to add the largest player on the consumer goods distribution market on March 9th and the changes will become effective on March 21st. The Romanian capital market has gone by 55% during the two years of Covid, the Bucharest Stock Exchange has announced.
Slovenia’s assets were under pressure with the SBITOP returning -2.94%. The central bank warned that economic risks from Ukraine war loom over Slovenia. “The direct exposure of the Slovenian economy to Russia and Ukraine is relatively small, but the indirect consequences of higher energy and raw material prices, declining foreign demand, financial stress, and falling confidence may be more noticeable,” the financial institution said. “Potential effects can also be expected from further outages in supply chains, which would lead to additional negative impacts on production,” it added.
In Nicosia, the stock market’s returns were negative for the week. The general index of the Cyprus Stock Exchange gave up 4.26%, the second worst performer of the region. The rise in energy and grain price levels due to the war in Ukraine, but also the possibility of stagflation are his main concerns Finance Minister Constantinos Petrides said on Friday, Cyprus Mail reported. “The Cypriot economy is disproportionately affected compared to other countries due to the structure of the Cypriot economy and its reliance on Russian tourists,” Petrides also told POLITICO.
Equities in Montenegro were flat. Standard & Poor’s affirmed Montenegro’s long- and short-term foreign and local currency sovereign credit ratings at ‘B/B’, with a stable outlook, the rating agency said in a statement on Friday. It added that geopolitical tensions following Russia’s military intervention against Ukraine could dampen Montenegro’s tourism this summer.
Bosnia’s stocks as measured by the SASX10 index returned 0.61%. The turnover on the Sarajevo Stock Exchange this week amounted to 20.100.174,84 KM. A total of 3.635.354 securites were traded in 83 transactions.
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Bulgarian equities gained. The SOFIX climbed 0.85%. Bulgaria’s economy grew 4.2% in 2021, preliminary data showed. Meanwhile, the central bank expects economic growth to slow down in H1 2022. In commodities, Bulgaria will spend 560 mln euro to boost grain reserves while Russian gas imports grew 20.75% y-o-y in January.
Croatian stocks were higher this week. The blue-chip CROBEX index added 1.47%. The IMF warned that the war in Ukraine casts shadow on Croatia’s strong economic recovery and Erste lowered Croatia’s 2022 GDP growth forecast by 1.2 pp to 3.4%.
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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.