Encouraged by the improved turnover recorded on the ZSE in 2019, we decided to analyse the activity of the most traded share in the region over the period from 2008 until today.

Low liquidity has been a long-term problem for regional markets and has discouraged many investors from investing in some of the local companies. However, certain market favourites have always existed and have been able to maintain a rather fair amount of turnover through good corporate governance and solid performance which sparked investors interest. Therefore, we decided to analyse the activity of the most traded shares in the region since 2008. To streamline the process we narrowed the analysis to only six companies from the Croatian, Slovenian and Romanian market.

Croatia

Overall, in May 2019, the ZSE recorded an average daily turnover of roughly EUR 1.48m, which represents a 46.6% YoY increase, indicating that investors’ confidence has risen. Of the total value traded in the period (excluding block transactions), Valamar generated 22.5%, followed by HT with 13.4%, Adris (preferred shares) with 12.8%, Končar and Podravka with 9.8%. These 5 shares generated more than two-thirds of the turnover recorded by the entire market.

Source InterCapital Research

Despite the recent high numbers, we see that for most of the observed companies trading volumes were far more pronounced in the beginning of the shown period. Later, volumes decreased significantly with only occasional significant aberrations. For example, a significant upsurge was seen in the case of Koncar when the state sold its stake in 2016.

Source InterCapital Research

However, both Atlantic Grupa and Podravka can serve as an example how strong results can have a positive influence on the company’s turnover. As once can notice on the chart, in 2018, when both companies posted record results the average daily turnover jumped above previous levels.

Source InterCapital Research

Slovenia

In Slovenia the trend is similar to the one in Croatia with almost all major companies recording a decrease in average turnover over the past decade.

Source InterCapital Research

However, standing as an outlier among decreasing turnovers, we have Cinkarna Celje. The company’s strong results and accompanying dividends managed to attract investors interest, thus significantly increasing the company’s average turnover in the observed period. Still one should note that the average daily turnover is still below EUR 100k.

Source InterCapital Research

Meanwhile, the insurance sector which provides some of Slovenia’s best performing companies has seen mixed results. Although Sava Re was initially recording improved liquidity, during the last couple of years liquidity has been decreasing and has now fallen below its initial level. On the flip side, Triglav has been successful in improving their liquidity with their current average daily turnover standing at three times the amount recorded in 2008.

Source InterCapital Research

Romania

Romania has always been the most liquid market in the region, and unlike Croatia and Slovenia investors had less problems with investing large sums. However, this does not mean that the market was spared of the overall decline in liquidity.

Source InterCapital Research

When observing the two Romaian banks it is interesting to see how the average daily turnover in 2019 recorded a significant jump in the aftermath of the new tax legislation introduced at the end of 2018. It seems that the large drop in value was enough to attract investor who believe in the recovery of the local banking shares.

Source InterCapital Research

Among Romanian shares one should also highlight Fondul Propiretatea whose average daily turnover has been significantly decreasing, despite the fact that the company often holds large share buy-back programs.

Source InterCapital Research