March 13 (SeeNews) - The Bulgarian Stock Exchange's benchmark SOFIX index could increase 15-20% in 2017, backed by cheap valuations and robust demand for blue chips in an environment of extremely low bank deposit rates, an analyst told SeeNews on Monday.
The SOFIX closed 0.62% higher at 624.91 on Friday, its highest point since November 2008.
Growing investor demand for blue chips from both institutional and individual investors, and cheap valuations have been the main reasons for the strong performance of the SOFIX over the past 12 months and its eight-year high, Tatyana Puncheva-Vasileva, head of research at Bulgarian brokerage house Elana Trading, told SeeNews in an e-mailed statement.
The launch of the first exchange traded fund based on the SOFIX, Expat Bulgaria, fuelled additional demand for the index constituents, Puncheva-Vasileva said.
The rise in demand for stocks from institutional and individual investors alike was prompted by good corporate results in 2016, with industrials being key contributors to the SOFIX growth together with financial and pharma stocks.
"Currently, even with the 40%+ rise, most blue-chip stocks continue to trade at attractive multiples compared to peer companies and markets," she added. "Dividend yields remain in the 4-5% range for stocks in and out of SOFIX. This is way above available deposit interest rates, thus, we expect equities to continue to attract yield-seeking money."