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Belgrade stock market indices to rise by up to 15% in 2017 - analyst

Belgrade stock market indices to rise by up to 15% in 2017 - analyst Slavko Sereda/Shutterstock.com

BELGRADE (Serbia), January 13 (SeeNews) - Belgrade stock market indices are expected to rise between 10% and 15% in 2017, carrying over their positive performance from last year, a local broker told SeeNews.

If global markets advance this year, the Belgrade bourse will perform even better, as the macroeconomic situation and the Serbian dinar are expected to stay stable, the Head of Strategy and Market Research Department at Eurobank Beograd, Ivan Radovic, told SeeNews in an e-mailed statement earlier this week.

"On the other hand, if we see turbulence on the markets, it will surely spill over to our shallow markets and we could see a quick and painful drop," Radovic added.

Both share indices of the Belgrade Stock Exchange recorded double-digit growth in 2016. The blue-chip BELEX15 index added 11.38% and broader BELEXline gained 13.69% on the back of the macroeconomic stability in the country. 

"We expect a similar trend in 2017," the head of trading at brokerage company CapitalOne, Vladimir Petrovic, told SeeNews in a separate e-mailed statement.

The growth will be even bigger if shares of Telekom Srbija start trading on the Belgrade bourse in 2017, Petrovic added.

In the opinion of Radovic, Telekom Srbija and state-owned power utility Elektroprivreda Srbije (EPS) will most likely push share indices higher but he does not expect the two companies "to come to the exchange anytime soon, at least not in 2017".

At the end of 2015, the Serbian government decided to retain control of Telekom Srbija after all offers from potential investors for the privatisation of Serbia's incumbent telecommunications company were deemed unsatisfactory.

According to Croatian media reports, Deutsche Telekom plans to participate in a new privatisation tender for Telekom Srbija through its subsidiary Hrvatski Telekom [ZSE:HT-R-A]. In December, Slovenian media reported that Slovenian and Serbian governments are considering the merger of Telekom Srbija and Telekom Slovenije [LJE:TLSG]. 

In 2016, oil and gas group NIS [BEL:NIIS] and civil engineering group Energoprojekt [BEL:ENHL] generated the highest trading turnover among the blue chips on the Belgrade bourse, of 982.4 million dinars ($8.4 million/7.9 million euro) and 843.5 million dinars, respectively.

Energoprojekt was the second biggest blue-chip gainer with a 37.99% rise in share price to 1,431 dinars last year. NIS was third, with the company shares ending the year 23.33% higher at 740 dinars.

With oil prices recovering, NIS shares are expected to maintain an upward trend, Radovic said. As for Energoprojekt, its profitability depends on "the holding structure of the company and the transfer pricing between the parent company and its subsidiaries," he pointed out. 

In the middle of November, the price of Urals crude oil started rising and reached $55.53 per barrel on the Moscow Exchange at 13:48 CET on Friday, versus $42 on November 7, a rise of 32%. Since November 7, the share price of NIS have increased by 20.2% and closed at 755 dinars on the Belgrade bourse on Thursday. 

As of September 30, Russia's Gazprom Neft owned a 56.15% stake in NIS, while the Serbian state controlled a 29.87% shareholding interest.

Blue-chip Belgrade airport operator Aerodrom Nikola Tesla [BEL:AERO], 83%-owned by the state, is among the companies which can be privatised in 2017. Shortly after his inauguration as prime minister in August, prime minister Aleksandar Vucic said that the airport needs investments of about 1 billion euro, which it can obtain either through privatisation or concession. Back then, he said that the government prefers concession to privatisation but the final decision depends on investor interest. According to media reports, Germany's Fraport, French-based Vinci Airports and industrial conglomerate Bouygues have shown interest in the potential privatisation or concession of the airport.

The total market capitalisation of the companies traded on the Belgrade Stock Exchange came in at 592.443 billion dinars at the end of 2016. The combined market capitalisation of the BELEX15 members was 245.852 billion dinars. 

(1 euro = 123.812 dinars)

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