Stocks in South East Europe were higher this week. However, markets continue to balance slowing economic growth and record high inflation against the outlook for interest rates ahead of the European Central Bank’s meeting next week.
In currencies, ECB Executive Board member Fabio Panetta stated that Croatia made the most progress on adopting the euro of seven European Union member states that are outside of the Eurozone. Other countries that the Frankfurt-based institution had assessed are Bulgaria, the Czech Republic, Hungary, Poland, Romania and Sweden.
In commodities, European Union leaders agreed an embargo on Russian oil imports that will kick in around the turn of the year but Bulgaria and Croatia get oil ban exemptions. “Member states who have a particular pipeline dependency on Russia can benefit from a temporary exemption and continue to receive crude oil delivered by pipeline, until the Council decides otherwise,” the EU Commission said. The temporary exemption comes as a result of Bulgaria’s “specific geographical exposure,” while Croatia will be able to receive imports of Russian vacuum gas oil, which it needs to operate its refinery, until the end of 2023.
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Greek stock market returns were positive this week. The Athens Exchange (ATHEX) general index gained 0.61%. On the macro front, prices surged 10.7% in May with the EU-harmonized inflation rate in Greece the fifth highest in the eurozone, according to Eurostat.
Assets in Belgrade were higher with the BELEX15 index jumping 2.32%. In currencies, the Serbian dinar’s official median exchange rate against the euro was 117.4394 dinars for one euro on Friday, according to the National Bank of Serbia. On rhe macro front, the Serbian government has adopted a 2023 fiscal strategy including projections for 2024 and 2025, under which the country will see 3.5% economic growth in 2022, which means that there will be no recession, the Ministry of Finance said.
Equities in Romania were lower. The bluechip BET index returned -0.09%. In currencies, Romania’s foreign exchange reserves increased by EUR419 million in May versus April, to EUR40.5 billion, central bank data showed. On the macro front, Romania’s unemployment rate stood at 5.5% in April but according to a survey by jobfinder platform BestJobs only 5% of Romanian employees now have their childhood dream jobs. Meanwhile, industrial production prices for the domestic and non-domestic markets soared 47% in April 2022 versus April 2021, but were 1.9% lower compared to March 2022, according to data from Romania’s statistics institute.
Slovenian market returns were positive. The SBITOP index advanced 2.14%. Slovenia’s consumer sentiment worsened last month, decreasing by 4 percentage points (pps) in May, after increasing by 6 pps in the preceding month. Meanwhile, the country’s average producer prices rose 20.4% y-o-y in April official data showed.
Cypriot stocks led the gains in the region. The general index of the Cyprus Stock Exchange soared 6.57%. On the macro front, the unemployment rate in Cyprus stood at 5.4% in April, decreasing from 5.8% in the previous month and 8.4% in April 2021, according to figures published by Eurostat, the statistical office of the European Union, on Wednesday. Meanwhile, Cyprus’ Index of Industrial Output Prices for April 2022 reached 123.8 units (base 2015=100), recording an increase of 19.5% compared to the same month last year, according the island’s Statistical Service (CyStat).
Bosnian equities rose with the SASX10 index up 1.97%. In economic news, Bosnia’s industrial output increased by 6.3% y-o-y in April while industrial sales rose 37.9%. And retail sales were up 21.5%, official data showed.
Stocks in Sofia traded in the green. The SOFIX index gained 0.80%. Bulgarian Stock Exchange’s (BSE) consolidated net profit grew 10.5% y-o-y in the first quarter of 2022, the bourse said. The number of trades on the BSE in May was 8,178, which was an increase of 23.37% compared to those in April. The number of trades for the past five months of the year grew by 54.18% compared to the same period of 2021. In other news, London-based EBRD will support EU funding under Bulgaria’s recovery plan, with a focus on the energy sector’s reform. In economic releases, Bulgaria’s industrial PPI soared 40% y-o-y in April while the country’s overall business sentiment slightly worsened in May.
Croatian stocks were also higher. The CROBEX index rose 0.07%. Zagreb bourse boosted its stake in Macedonia Stock Exchange to 9.92%, the Croatian bourse announced. In currencies, Croatia’s central bank forex reserves increased by 25% y-o-y in April. The central bank also said that in the first quarter of 2022, total assets of credit institutions increased by HRK 5.3bn (1.1%) from the end of 2021 and stood at HRK 506.2bn.
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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.