market wrap-up
The gloom related to USbank insolvencies and investors fleeing for liquidity influenced the Bulgarian Stock exchange. The absence of local corporate news contributed to the fact that trading was driven mainly by the fear of foreign market collapse. Trading on Friday alone brought SOFIX down 5.15%, to 752 points and a 54-weeks low, with the WoW change reaching -8.4%. BG40 followed the same pattern: the index slipped down on Friday by 6.4% to 186 points, contributing to a weekly drop of -8.95%. BGTR30 lost 9.0% WoW to 495 points, while BG REIT lost 5.7%, to 76.5 points. We expect the Bulgarian market to closely follow the market sentiment of foreign exchanges at least until the end of Oct, when Q3 08 financial reports are due. The releases will show if current market levels are solely the result of influence from abroad.
news Highlights
- Natural gas prices will be increased on2 occasions by a total of 50% in the next six months: the first hike of 24% was implemented with retrospect as of Oct 1st, while the second one, adding an additional 24.15%, would take place on Jan 1st, 2009.
- Overall producer price index in Aug 2008 declined by 0.1% MoM, but is still up by 11.8% YoY.
- Sofia Airport handled 0.33m passengers in Aug, up 22% YoY.
- Leumi, a new bank, was registered in Bulgaria. The lender will focus on corporate clients and real estate.
- Petrol [5PET]’s B- rating was placedon Watch Negative by Fitch on concerns over a sizeable share buy back in Q2 08, which is inconsistent with the required use of proceeds from the recent sizable sale of assets, and general doubts with regard to the corporate governance practices.
- Moody's lowered the outlookon the foreign currency deposit ratings of DSK Bank, Raiffeisenbank Bulgaria and Piraeus Bank Bulgaria from positive to stable, due to Moody’s decision to change Bulgaria's Baa3 foreign currency deposit ceiling from positive to stable.
- First Investment Bank [5F4] announced plans to roll overonly half of the €185 1-yr syndicated loan due to expire in Oct, on expectations of lower credit growth. Separately, the bank’ shares are now traded on the official equity market, Segment B.
- A subsidiary of Chimimport [6C4] was voted as the new member of Neochim [3NB]’s Board of Directors.
- Yavor AD [3YP] will increase its capital 134 timesto BGN 15m using own funds (perform a stock dividend). The company will issue 14.98m new shares at BGN 1 per share.
- Sopharma [3JR] increased its direct stake in Medika AD [5MA] above the 5% limit. Sopharma owns already above 90% of its capital through related parties.
- Sopharma Real Estate REIT [6S6] purchased a 7.8k sq.m. land plot in Sofia, in Izgrev district, for BGN 4m excl. VAT. The plot is destined for an administrative and retail centre.
SOFIX/ BG40 (chart)
BGTR30/ BG REIT (chart)
| Change | SOFIX | BG40 | BGTR30 | BGREIT |
| 1-wk | -8.4% | -8.9% | -9.0% | -5.7% |
| 3-mo | -32.1% | -37.2% | -34.1% | -19.6% |
| YtD | -56.7% | -64.0% | -54.4% | -27.0% |
| 12-mo | -61.5% | -69.3% | -59.3% | -26.1% |
Top Gainers*
| EuroIns Insurance AD [5IC] | 5.0% |
| Doverie-Obedinen Holding [5DOV] | 1.2% |
| Bulgartabac Holding [57B] | 0.0% |
Top Losers *
| Petrol [5PET] | -31.6% |
| First Investment Bank [5F4] | -22.2% |
| Sopharma [3JR] | -15.1% |
| Turnover statistics | Week 40 |
| Weekly volume (shares) | 7 510 997 |
| Avg. weekly volume YtD | 12 316 443 |
| Weekly turnover (BGN) | 21 178 013 |
| Avg. weekly turnover YtD | 52 950 404 |
FIXED INCOME AND MACRO DATA
Most recent macro data
| BGN/EUR exchange rate | 1.95583 |
| Inflation (HICP, YoY Aug) | 11.8% |
| Inflation (HICP, cumulative 2008) | 7.1% |
| GDP Growth (YoY H1 2008) | 7.1% |
| Unemployment (Aug 2008) | 5.9% |
| Public External Debt/GDP (Aug '08) | 10.2% |
| FDI Jan-July '08 (EUR) | 2.8bn |
| C/A Deficit/GDP (Jan-July '08) | -13.9% |
Source: BNB; NSI; National Employment Agency
| Type | Coupon | Maturity | Currency | Yield (%) |
| Treasuries | 3.75% | 16-Feb-10 | BGN | 5.42 |
| Treasuries | 4.75% | 11-Feb-11 | BGN | 5.40 |
| Treasuries | 5.20% | 04-Feb-14 | BGN | 5.41 |
| Eurobonds | 8.25% | 15-Jan-15 | USD | 6.39 |
| Sofibor | Overnight (ON) | BGN | 5.75 | |
| Sofibor | 3-month | BGN | 7.49 | |
| Sofibor | 12-month | BGN | 8.73 | |
| Base Interest Rate | BGN | 4.96 |
Source: BNB; UBB
news in the spotlight
Financial sector Interest rates continue to rise in August
In Aug 2008, the average interest rate on outstanding corporate loans in BGN (excluding overdrafts) reached 10.6% (up 106bps YoY) while the average interest rate on new corporate loans came in at 11.33% (up 232bps YoY).
The annual percentage rate of charge on new consumer loans in BGN was 12.74% (up 181bps YoY), and 10.35% (up 132bps YoY) on mortgage loans. Interest rates on outstanding consumer and mortgage loans came in at 11.17% (up 42bps YoY) and 9.02% (up 37bps YoY), respectively.
The average interest rateon new corporate deposits in BGN with agreed maturity was 5.44% (up 120bps YoY, but down 5bps MoM), while the rate on new deposits from households was 5.89% (up 156bps YoY and up 8bps MoM). The average interest rate on outstanding corporate deposits in BGN with agreed maturity was 5.13% (up 138bps YoY), while the rate on outstanding deposits from households was 5.30% (up 82bps YoY). Source: BNB
Banking system
Continuing solid growth in Aug for the banking industry
As of end Aug 2008 total assets of the banking system in Bulgaria reached BGN 69.1bn (up 17% YtD). Total loans of BGN 54.5bn (up 21.5% YtD) continued to increase at a higher rate compared to that for deposits (BGN 53.5bn, up 15% YtD). Despite the solid growth, the asset quality remained relatively sound with provisions/total loans ratio of 1.9%. The net profit for the Jan-Aug period totalled BGN 994m (up 34% YoY). ROaE came in at 22%. Source: FFBH
SELECTED STOCKS INDICATORS (table)
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Copyright: 2006 First Financial Brokerage House. All rights reserved.For further Information please contact FFBH, 2 Enos Str., 1408 Sofia, BulgariaPhone: +359 2 810 64 21, fax: +359 2 810 64 01, e-mail: ffbh@ffbh.bg, web site: http://www.ffbh.bg
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BWU Weekly 29.09-03.10.2008.pdf, 76 Kb
