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Nov 06, 2007 19:51 EEST
BELGRADE (Serbia), November 6 (SeeNews) – The Belgrade bourse closed higher on Tuesday but brokers remain skeptical whether the market will recover soon and say the strong Serbian dinar currency continues to drain funds from stocks into bank deposits.
Total turnover on the Belgrade Stock Exchange (BELEX) rose to 593 million dinars ($11.2 million/7.7 million euro) from 408 million dinars on Monday.
“The turnover is the only thing that encourages me,” Mirko Trivunovic, a broker with Fidelity brokerage, told SeeNews. “It means the turnover has ceased to fall and we have some stable volumes of 5 to 7 million euro on a regular basis.”
After the record highs BELEX indices scored almost daily through April and May, the Serbian market sank into summer lethargy, which continued in tiny volumes and listless trading through September to end in a slide to which many refer to as “the red October” on the Belgrade bourse.
The blue-chip index BELEX15, which closed at 2,820.57 points on October 1, landed at 2,569.74 points on Tuesday, still 0.91% up from the previous day. The broader BELEXline index edged up 0.36% to 4,146.19. The joint SRX index of the bourses in Belgrade and Vienna added 0.75% to 1,477.26 points.
Market players say they can hardly find an explanation for the sluggish trade other than the unresolved issue of the future status of Kosovo, which jeopardizes Serbia’s political and economic stability.
A new round of internationally mediated talks on the status of the U.N.-run southern Serbian province started in September with a December 10 deadline. The talks should solve the dispute around Kosovo’s independence, but the province’s ethnic Albanian majority has repeatedly said they will unilaterally declare it regardless of the talk’s outcome. The U.S. and most EU countries are believed to be ready to recognise Kosovo’s independence, while Russia and Serbia adamantly oppose it.
Kosovo has been under U.N. administration since NATO bombs drove out Serb forces amid inter-ethnic fighting in 1999. Serbs oppose any form of independence for the province while Kosovo ethnic Albanians insist on it.
“Besides the Kosovo crisis, I think what weighs even more is the strong dinar, which is drawing away [from the bourse] a very high amount of money,” Trivunovic said.
The dinar hit a three-year high against the euro on October 26, reaching an average official rate of 76.8 dinars per euro, 10 days after the previous three-year high.
“The people sell dinars and go into euro, so the pressure on the euro is extremely strong,” Trivunovic said. “At the same time banks give extremely high and attractive interest on time deposits.”
The key repo rate of the Serbian central bank is 9.5%, after the bank cut it by 0.25 percentage points a week ago.
On Tuesday, blue-chip AIK Banka was the best traded company in turnover terms on the BELEX, gaining 2.58% to 10,705 dinars in 71 million dinars of turnover.
(1 euro = 77.3348 dinars)
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