Stocks in South East Europe fell this week in line with markets across the Old Continent on fears that soaring inflation and rising interest rates could tip economies into a recession. Cyprus led the losses in the region with the General Index shrinking by 3.50%, followed by Athens where the benchmark returned -3.48%.
Inflation in the eurozone reached 8.6% in June, setting a new all-time high, driven by soaring energy and food costs, according to Eurostat. Greece had the fifth highest inflation in the eurozone after Estonia (22%), Lithuania (20.5%), Latvia (19%) and Slovakia (12.5%). European Central Bank President Christine Lagarde said inflation expectations were still the ECB’s primary focus. Other ECB officials like Martins Kazaks (Lithuania) and Belgium’s Pierre Wunsch are in favor of a 50bp rate hike as early as July.
Meanwhile, a European Commission survey showed that economic sentiment weakened as pessimism among consumers deepened and retail confidence deteriorated. In politics, Bulgaria’s coalition government resigned and the Bulgarian president asked WCC’s PM-designate Assen Vassilev to form a new government. On the macro front, the International Monetary Fund lowered Bulgaria’s GDP growth forecast to 2.8%.
In other news, Bulgaria lifted to 8 million euro the fundraising limit on Sofia’s bourse SME growth market BEAM. The beam market allows companies to raise funds of up to EUR 3 million without the need of an approved prospectus by the Financial Supervision Commission. In Croatia, the Zagreb Stock Exchange will halve its equity capital, to 23.18 million kuna ($3.2 million/3.1 million euro) by merging two existing shares into one new share.
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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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