Investors drove Croatian tourism stocks higher, expecting solid financial impact from what seemed to be a very successful summer season, judging by early interim indicators in terms of tourist arrivals and overnights. Confirmation came from the financial reports for the third quarter, as hoteliers recorded a significant increase in overnights, but were also able to charge higher prices, the research unit said in its quarterly market report.
The Erste analysts view the developments surrounding tourism company Istraturist, i.e. delisting and takeover bid by Zagrebacka Banka, as having additionally spiced up the situation in the sector, as investors evaluated the possibility of further M&A activity and the likely higher valuation of these stocks. Consequently, almost all tourism stocks recorded sharp price gains.
The report noted that the environment in Croatia's construction sector remained extremely weak and construction companies were clear underperformers on both second-half and YTD levels. The main reasons are the lack of construction works in Croatia and the high indebtedness of the construction companies with financing costs eating up their capital.
After the first half of the year ended on a negative tone, the Croatian equity market commenced an uptrend in the second half of the year. The current levels of equity benchmarks CROBEX and CROBEX10 are at about halfway between the April highs and June lows – largely unchanged on a YTD level, the research unit said.
Erste Group Research said trading volumes on the Zagreb bourse remained at rather low levels, only occasionally interrupted by higher turnovers or block transactions, with daily turnover averaging around 10 million kuna ($1.7 million/1.3 million euro) in the second half of the year.
(1 euro=7.5548 Croatian kuna)