March 10 (SeeNews) - The Bulgarian Stock Exchange's blue-chip index SOFIX is testing resistance levels in the range of 615-625 points, which it last visited in the spring of 2014, a portfolio manager told SeeNews on Friday.
"In case it succeeds to break through, we could see a further rise towards 700 points," Georgi Georgiev, portfolio manager in Bulgarian brokerage house Karoll told SeeNews by email.
Logically, after a strong rise in 2017 - by 27.2 points year to date - the market has consolidated just below 625 points, Georgiev added.
On Thursday, the SOFIX closed 0.22% lower at 622.41 points snapping a five-day winning streak.
Changes at the top management level in the financial regulator as well as the programme for development of the capital market in Bulgaria have provided a strong impetus to the market. The results of 2016 stress tests of Bulgarian banks have also had a positive impact, Georgiev added.
In July, Karina Karaivanova, an ex-deputy minister of finance, was appointed as a new head of Bulgaria's Financial Supervision Commission, replacing Stoyan Mavrodiev. In August, the central bank said that the Bulgarian banking sector was stable, following an asset quality review and stress tests of local banks.
The strategy for development of the Bulgarian capital market was adopted by Capital Market Development Council. The council's members include the Bulgarian Stock Exchange, the Financial Supervision Commission, the American Chamber of Commerce in Bulgaria, the Central Depository, as well as associations from the financial and industrial sectors. In November, the Capital Market Development Council said it targets expansion of the variety of financial instruments traded on the BSE, attracting foreign and domestic investors and enhancement of financial literacy among potential investors.
The Bulgarian stock market's performance has not been affected by the recent political turbulence in the country, Georgiev said.
The minority coalition government of prime minister Boyko Borissov resigned in November, shortly after the candidate of the main governing party GERB lost the presidential elections. Following the resignation, a caretaker cabinet was appointed and early parliamentary elections were scheduled for March 26.
"This once again is demonstrating that when markets are dominated by positive sentiment, this kind of news cannot affect it," Georgiev added.
The introduction and performance of Expat Bulgaria SOFIX, the country's first exchange-traded fund (ETF) based on the SOFIX, the positive 2016 results of Bulgarian companies and the economic development of Bulgaria and Europe have also been favourable for the rise in the BSE's main index, according to Maria Boychinova, chief financial analyst and member of the board of directors of Expat Asset Management told SeeNews.
Expat Asset Management is the company managing the ETF. In February, Expat Bulgaria SOFIX UCITS ETF received an approval from the Financial Conduct Authority (FCA) for cross-listing on the London Stock Exchange (LSE).
The positive financial results of Bulgarian blue-chip companies such as drug maker Sopharma, lender Fibank and optimistic five-year forecasts of car battery manufacturer MonBat, have been driving the market higher in a sustainable way, Boychinova added.
"Our plans to register the ETF on the LSE will allow investors which previously did not have access to the Bulgarian markets to have this option," Boychinova said.
SOFIX rose to 621.68 points as of 11:36 CET on Friday, up by 0.10% compared to Thursday's close and just 1.16 points below the peak of 622.84 points in reached on 3 April 2014.