January 4 (SeeNews) - Unless the situation in the eurozone improves, it is unlikely that a one-off pre-accession rally could be expected on the Zagreb bourse in 2012, the Adriatic country's run-up year to EU accession, Erste Group Research said on Wednesday.
"We do not expect [Croatian listed] infrastructure companies or cyclicals in general to benefit in 2012, unless there are some company-specific drivers to fuel the stock price," Erste Group Research said in its CEE Equity Strategy 1Q 2012 report.
"Some sectors like construction are still under restructuring, while home-oriented companies should be preparing for EU entrance that will take place in 2013. We therefore think a majority of companies will be putting a lot of emphasis on cost efficiency."
Erste said investors looking at Croatia will prefer stable companies, high debt coverage ratios, net cash companies and defensives in 2012.
The acquisition by Croatia's privately-held Agrokor of a 52% stake in Slovenian retailer Mercator, which is currently in the final stage, could also mark next year, the report said.
"We expect members of the Agrokor Group, like Belje, Jamnica, Zvijezda and Ledo to benefit from the strengthening and expansion of Agrokor's retail chain."
The left-of-centre Kukuriku coalition won Croatia's parliamentary elections at the beginning of December by taking 80 out of 151 MP posts.
"One of the key short-run government goals will be keeping the BBB credit rating, as it currently stands on the edge of investment grade. Fiscal reform and the implementation of necessary savings measures should take place early in the rule of the new coalition. A positive outcome would keep interest rates stable and alleviate refinancing concerns," Erste said.
"On the spending side, investments in the energy and tourism segments are part of the plan, although we do not expect any immediate short-term effect. Most likely, projects already initiated will proceed, while new projects will have to wait for private investors to participate and financial markets to stabilize.
Even though the railway segment is highlighted as one of the top priorities from the investment point of view, the majority of these should take place upon Croatia's EU entrance, in order to engage EU funds."
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