Commentary
Slight optimism on the BSE
The sentiment on the BSE during the past week was slightly more optimistic than during the previous ones, SOFIX finishing on positive territory for six sessions in a row, managing to stay above the 1 000 points level, adding nearly 3 % for the week. More than half of the stocks from BG 40 ended the week higher. The top gainers from the broad index were Moststroy [5MY] that surged by nearly 11 % for the week, Chimimport [6C4] (+7.3 %), Doverie United Holding [5DOV] (+7.7 %), Central Cooperative Bank [4CF] (+7.3 %). Apart from Moststroy, the other infrastructure companies were among the best performing stocks for the week as well, Holding Roads [6H2] appreciating by 8.1 % and Trace Group [T57] gaining 6 %. Liquidity however remained low.
One of the major events this week was the introduction of short selling and margin trading as the amendments to the Ordinance on short selling and margin trading came into force on August 14, thus enabling the application of these instruments on the Bulgarian market. According to the latest changes stocks can be shorted and bought at margin only if they meet the following criteria: they must have been traded during at least the past 15 trading sessions; the average daily turnover should be not less than 5 000 lots, the average daily number of transactions should be not less than 30 and the market capitalization should be not less than BGN 20 mln. Only 8 companies currently meet these criteria and these are Sopharma [3JR], Central Cooperative Bank [4CF], Eurohold Bulgaria [4EH], Industrial Holding Bulgaria [4ID], First Investment Bank [5F4], Monbat [5MB], Chimimport [6C4] and Grain Foods Bulgaria [T43]. Although the legislative changes came into force on Thursday and the first short sale deal was concluded, the real start is yet to come. One of the impediments to the faster implementation of the changes and the start of short selling and margin trading on the Bulgarian market is the lack of a clearing house to keep track of the settlement of the deals and to guarantee the payment.
The attention of the investors during the next two weeks will be focused on the release of the Q2’08 consolidated corporate results. Although we do not expect that even the positive results will have any major impact on the stock trading, the reports will disclose the effect of the slowdown of the world economy, the high raw materials prices and the weak US dollar in H1’08 on the results of the Bulgarian companies.
The report also includes:
market Trends
SOFIX (chart)
BG40 (chart)
market Statistics
| Segment | Volume (BGN) | Deals |
| Trading in Equities | 24 945 036.46 | 4 295 |
| Weekly Chng | 84.65% | 3.57% |
| Trading in Corp. Bonds | 702 699.48 | 22 |
| Weekly Chng | -72.19% | -40.54% |
| Margin Trades | 15 780.47 | 1 |
| Weekly Chng | n.a. | n.a. |
| Short Selling | 850.00 | 1 |
| Weekly Chng | n.a. | n.a. |
| market Capitalization: | BGN 20.39 bln / EUR 10.43* bln |
* The Bulgarian Lev is pegged to the Euro at BGN 1.95583 per EUR 1.00.
BG40 Stocks, August 15, 2008 (table)
Gainers & Losers*
| TOP GAINERS | Ticker | Sector | Weekly Chng |
| Alcomet AD | 6AM | metallurgy | + 11.69% |
| Moststroy AD | 5MY | construction | + 10.95% |
| Neochim AD | 3NB | chemical | + 8.12% |
| TOP LOSERS | |||
| Park REIT | 4PK | REITS | -13.00% |
| Bulgarian American credit Bank | 5BN | banks | -12.81% |
| Specialized Business System AD | 6SP | IT | -6.14% |
*Gainers: Among shares with turnover above BGN thnd 50; Losers : Among shares with turnover above BGN thnd 20;
Мain Economic Indicators
| 2005 | 2006 | 2007 | |
| GDP, in bln EUR | 21.88 | 25.24 | 28.9 |
| GDP, real growth | 6.2% | 6.3% | 6.2% |
| Inflation, avg. | 5.0% | 7.3 % | 8.4 % |
| Unemployment, avg. | 9.9% | 8.4 % | 6.1 % |
| Fiscal Balance, %GDP | 2.3% | 3.7 % | 2 % |
| Gross Public Debt, %GDP | 29.9% | 23.0 % | 19.0 % |
| Gross external debt, %GDP | 69.8% | 80.7% | 97.3% |
| Current Account, %GDP | -12.4% | -17.8% | -21.5% |
| FDI, %GDP | 14.4% | 23.7% | 21.4% |
| Prime interest rate | 2.04% | 2.69% | 3.93% |
East European Markets
| index | Value | Weekly Chng | YTD Chng |
| Bulgaria SOFIX | 1037.91 | 2.91% | -41.29% |
| Croatia CROBEX | 3 651.90 | 0.60% | -30.29% |
| Macedonia MIB-10 | 5 262.21 | -1.83% | -32.02% |
| Montenegro NEX20 | 18 827.39 | -1.66% | -44.90% |
| Romania BET-C | 5 911.66 | -6.72% | -39.83% |
| Russia MICEX10 | 1 460.20 | 7.40% | -22.69% |
| Serbia BELEXline | 1 445.47 | 1.37% | -37.65% |
| Turkey ISE-100 | 42 194.42 | 3.04% | -24.03% |
| Ukraine PFTS | 641.22 | 1.50% | -45.38% |
| Morgan Stanley MSCI EE (€) | 564.42 | 5.96% | -22.21% |
news of the week
Economics
- The Consumer price index [CPI] went up by 1.5% in July 2008, comparеа to the previous month. On a yearly basis the increase is 14.5 %. The inflation year-to-date is 6.1 %.
- The current account deficit reached EUR 3 785.5 mln [11.5% of GDP] in the period January-June 2008, up from EUR 2 885.7 mln [10% of GDP] for the same period in 2007.
- The Foreign Direct investments in Bulgaria amounted to EUR 2 078.6 mln [6.3% of GDP] in the first half of 2008, compared to EUR 2 537.1 mln [8.8% of GDP] attracted during the same period a year ago, preliminary data shows.
Politics
- On September 06 the three Bulgarian right-wing parties, which are members of the European People's Party, are going to launch a national petition to protest against the three-way coalition government . The purpose of the initiative is to demonstrate that the current government does not have the support of the majority of the Bulgarian citizens.
- The government has decided to recalculate all pensions of 1.2 mln. elderly people and to increase them by 8.5% on average since October 1, the Prime Minister S.Stanishev announced. The rulers are planning also to increase the energy aid currently provided by about 60% and to allocate individual financial packages to those, who cannot cope with the inflation.
Corporate Sector
- Enemona AD [E4A] announced it has bought the majority stake in Energomontaj Komplekt [EMKO Belene], a manufacturer of customised stainless and carbon steel frames, pressurised containers, boilers and tanks. The deal is in line with the company’s plans to participate in the construction of NPP Belene as EMKO is envisaged to supply steel components for the NPP Belene construction works. The company already has signed contracts at the amount of BGN 30 mln. for the next couple of years. The value of the deal was not disclosed.
- Digital Print EOOD, a 100 % subsidiary of Bilboard AD [5BP] has purchased premises ( the total area of the real estate is 5 466 sq.m) in the business center ‘Bee Garden’ in Varna at the total amount of EUR 4.88 mln. The investment is in line with the announced construction of a new printing base in Varna, which will combe both wide format and offset printing activity. Part of the purchase was financed through a 10-year investment loan of EUR 3.36 mln. agreed with Societe Generale Expressbank – Varna branch. The rest of EUR 1.52 mln. was paid by a part of an intra-group loan of Bilboard AD to Digital Print EOOD.
- Sopharma AD [3JR] increased its stake in the Ukrainan OAO Vitamini by 4.93 % to 79.07 %. No Information about the price of the deal was provided. The Ukrainian company is one of the six subsidiaries of Sopharma abroad.
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Newsletter 2008.08.18.pdf, 224 Kb
