SEE stocks

Risk assets suffer in SEE amid recession fears


Risk assets were sharply lower this week in South East Europe in line with rest of the world. Leading central banks doubled down on tighter policy in an effort to tame soaring inflation, setting investors on edge about future economic growth. The US Federal Reserve’s most aggressive rate hike since 1994 raised recession fears while Switzerland’s national bank surprised markets by raising its interest rates by 50bp, the first such Swiss move in 15 years. Croatia led the losses in the region, followed by Athens.

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Greek markets fell for the week. The Athens Exchange (ATHEX) general index sank 4.31%. Eurozone finance ministers accepted on Thursday a recommendation by the European Commission to end Greece’s enhanced economic surveillance, stating that the country has “successfully delivered the bulk” of its policy commitments. In economic releases, the Greek unemployment rate fell to 12.5% of the workforce in April, from 12.6% in March and 17.2% in April 2021, the Hellenic Statistical Authority (ELSTAT) said on Wednesday.

In other news, European Investment Bank analysts warn of the impact of the war in Ukraine on Greece. Companies in Greece, Croatia and Spain will suffer more than the EU average as in Greece, the EIB’s model sees a 27.6% increase in the share of firms reporting losses. This is the highest projected increase in the EU and is almost exclusively due to higher energy prices.

Serbia’s stock market returns were negative for the week. The BELEX15 index dropped 0.94%. Serbia is on course for solid growth of 3% and 4% in 2022 and 2023, as the government’s macroeconomic policy framework helps the economy withstand the shocks from the conflict in Ukraine and rising inflation, Scope Ratings said. “Despite increased economic uncertainties, Serbia’s medium-run growth outlook remains favourable” the agency said.

Romania’s bluechip BET index ended the week 1.71% lower. International uncertainty is felt on the Bucharest Stock Exchange. More transactions were made last month when compared to May 2021, but against the background of smaller volumes. Thus, almost 118,000 transactions were made last month on BVB, 44.6% more than the same month last year. By contrast, the monthly trading value on the stock segment was 2.5% last month below the level of May 2021 and reached RON 685 million. The average daily value of transactions in the share segment suffered a sharper decline, of 11.3%, and reached a level of RON 31.2 million, the BVB said.

Slovenia’s SBITOP index plunged 2.61%.The Toronto-based credit rating agency DBRS Morningstar said it confirmed Slovenia’s long-term foreign and local-currency Issuer Ratings at ‘A’ . New York-based agency S&P Global Ratings has affirmed the country’s AA- rating, both with a stable outlook. S&P Global expects the Slovenian economy and public finances to remain robust despite geopolitical risks, rising inflation and demographic disparities. The agency forecasts economic growth of 3.9% for this year.

The general index of the Cyprus Stock Exchange added 0.85% over the week, bucking the trend in the region. The Cyprus Fiscal Council has recommended particular caution in public finances to the Cypriot government, due to increased risks which may persist over time, expressing the view that support measures should be focused on small and medium-sized enterprises and vulnerable groups of the population rather than across the board.

Bosnia’s markets generated a negative return for the week with the SASX10 down 0.65%. The turnover on the Sarajevo Stock Exchange this week amounted to 52.057.242,36 KM. A total of 688.951 securites were traded in 63 transactions. On 14.06. the 70th auction of treasury bills of the Federation of BiH was held. A total of 5.000 treasury bills were subscribed using the multiple price method, which raised a total of BAM 50.011.172,37 for the issuer.

In Bulgaria, stocks as measured by the SOFIX index returned -1.17%. On the macro front, the annual inflation rate in the country accelerated to 15.6% in May , from 14.4% in the prior month. It was the highest reading since May of 1998. Meanwhile, the unemployment rate fell to 4.5%. In politics, the Bulgarian parliament will debate a no-confidence motion against the government on June 21. It comes as the energy and foreign ministers resigned as the coalition falters.

Croatian equities led the losses in the region. The CROBEX index shrunk by 4.61%. The country’s annual inflation rate jumped to an all-time high of 10.8% in May, from 9.4% in the previous month. Eurozone finance ministers in the Eurogroup gave the green light for Croatia’s euro accession on Thursday, saying they agreed with the European Commission and the European Central Bank’s positive assessment of Zagreb’s fulfilment of convergence criteria. The recommendation brings the newest EU member, who joined the bloc in 2013, a step closer to adopting the single currency on 1 January 2023.

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Kyriaki Balkoudi is a markets editor for World Markets Daily. She holds 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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