SEE stocks

Concerns about growth fuel risk aversion in SEE markets


South East European assets declined this week with Slovenia leading the losses in the region. Athens bucked the trend supported by positive corporate results. Concerns about inflation, tightening monetary policy, and the economic outlook remain. The European Bank for Reconstruction and Development (EBRD) is predicting a greater economic slowdown and more inflationary pressure in its regions as a result of the war on Ukraine.

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Equities in Athens ended the week in a positive note with the ATHEX general index ticking up 0.03% amid positive corporate results released in the last couple of days. In other economic releases, Greece’s annual inflation soared in April to 10.2%, from 8.9% in the previous month, the fastest since January of 1995, as a result of surging costs for energy, housing, transportation and food, according to the Hellenic Statistical Authority (ELSTAT).


Serbian stocks as measured by the Belex 15 index returned -0.24%. On the macro front, Serbia’s annual inflation climbed to 9.6% in April from 9.1% in the previous month and beating market expectations of 9.5%. It was the highest reading since June of 2013. Meanwhile, the EBRD affirmed Serbia’s 2022 GDP growth forecast at 3.3%.

On the monetary policy front, the National Bank of Serbia lifted its key interest rate by 50bps to 2%, the second back to back rise in borrowing costs, and a more aggressive move than analyst forecasts of a 25 bps hike. In politics, Serbia’s president Aleksandar Vucic won 58.59% of votes in the country’s presidential election, official final results showed.


Romanian assets were lower this week. The blue-chip BET index dropped 1.69%. Romania’s annual inflation rate accelerated to 13.76% in April from 10.15% in the prior month. This was the highest reading since February 2004 amid surging food prices. The central bank raised its key monetary policy rate by 75bps to 3.75%, the sixth consecutive hike since October, and lifted its 2022 inflation forecast to 12.5% on rising energy prices and war in Ukraine. The EBRD lowered Romania’s 2022 economic growth projection to 2.5%. Meanwhile, Romania’s trade deficit rose 34% y-o-y in the first quarter of 2022.


Slovenia’s stock market returns were negative with the SBITOP index shrinking by 4.63%. In economic news, Slovenia’s industrial output rose 3.9% m-o-m in March. On the banking front, S&P upgraded Slovenia’s Nova Ljubljanska Banka (NLB)  credit rating to ‘BBB.’


The general index of the Cyprus Stock Exchange was off 0.57%.
In an interview with the Cyprus News Agency, the island’s Finance Minister Constantinos Petrides warned that tackling inflation is difficult due to its structural nature amid the Ukrainian crisis. He also cautioned “things will be difficult in the coming years” and highlighted the importance of maintaining fiscal buffers. In other news, Cyprus’ trade deficit amounted to €729 million in March, preliminary data from the Cypriot Statistical Service (CyStat) showed.


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Bosnia’s SASX10 index was off 0.69%. The EBRD lifted Bosnia’s 2022 economic growth forecast to 3%, revising upward its previous projection by 0.7 points. On the bnking front, Bosnia’s end-March M1 money supply was up 15.6% y-o-y, central bank data showed and Bosnia’s Nova Banka finalised the acquisition of Sberbank Banja Luka.


Bulgarian equities were lower with the SOFIX index returning -0.59% over the week. The EBRD cut Bulgaria’s 2022 GDP growth forecast to 2.5% and Bulgaria’s consumer confidence worsened in April, according to the country’s statistical office.

“The Bulgarian economy can last 6 months if Russia stops the oil and if the Bosphorus is closed” Deputy Prime Minister and Minister of Finance Asen Vassilev said on Friday.  Vassilev also announced that he had received information from the European Commission that Bulgaria would be included in the list of exceptions to which the oil embargo from Russia would not apply.

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Croatian stocks were off 1.75%. The EBRD lowered Croatia’s 2022 GDP growth projection to 3% while credit rating agency Fitch has affirmed Croatia’s long-term foreign currency issuer default rating at ‘BBB’ with a positive outlook. In other news, Croatia’s parliament passed a law introducing the euro next year. Opponents of the measure have warned that it will increase poverty and inflation. The government also raised the deficit level to 2.8%/GDP in the 2022 budget revision.

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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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