Following up on our overview of the impact the positive and negative periods on the stock exchange had on the trading on the ZSE, today we bring you an overview of how these periods affected the trading on the Ljubljana Stock Exchange, by looking at the SBITOP index and its constituents.
Before we start, it should be noted that looking at the average turnover during a certain period can tell us a lot, but to get the entire story, one should also look at how the stock performed in that period.
However, the last two years were marked by multiple events that had a significant impact on the market as a whole (COVID-19 pandemic and the measures put in place to combat it, supply chain disruptions, inflation, and the current geopolitical uncertainty related to the conflict in Ukraine), we decided to look at how the average turnover of Slovenian companies changed in those periods, as compared to when the market was growing. This was done to answer a fundamental question, was more trading done during the positive days, or was the opposite true?
The best way to show this is to look at the daily changes of the SBITOP index, and then class them as either “bearish” (when the index declined as compared to the day before), or “bullish” (when the index increased compared to the day before). After doing this, the average daily turnover of all the SBITOP constituents is taken and classed into either one of those categories.
This would mean that since the beginning of 2020, there was a total of 602 trading days on the Ljubljana Stock Exchange. As we are using the SBITOP index as the benchmark for the market performance on the exchange, 354 days can be considered bullish, while 248 days can be considered bearish. This means that since the beginning of 2020, 59% of the days were bullish, while 41% of the days were bearish. Now the question remains, how did this affect the turnover of SBITOP constituents?
Average turnover of SBITOP constituents since the beginning of 2020 (EUR 000)
The most traded stock, Krka, had a turnover of EUR 685.3k during the positive days, and a turnover of EUR 715.2k during the negative days, meaning that the company’s turnover when the market was green was 4.2% lower. So what can this tell us? First of all, as the most traded company on the exchange, any changes and developments in the market (and by extension, the world) will surely affect Krka first, regardless of the development. Furthermore, as to “compound” this effect, the news that did come out in the last two years had a real effect on the company (COVID-19 as Krka is a pharmaceutical company, the war in Ukraine as Russia and Ukraine made up app. 27% of the Company’s sales at the end of 2021). Combined, this does explain why it was more traded during the negative days, but like we said, to get the full picture one should look at the performance of the stock in any of these periods. Next up, we have NLB, which has a turnover of EUR 231.9k during the positive days and EUR 229.8k during the negative, meaning that the difference is below 1% (0.94% to be exact), which when taking into account the strong performance of the company, as well as the stability of the financial sector in the last couple of years does not surprise.
Following them is Petrol, which had an average daily turnover of EUR 148.4k during the positive days and EUR 156.9k during the negative days, a -5.4% difference. Considering that Petrol is an Oil & gas retailer, energy trader and in small part energy producer company, it depends on the changes in prices of those commodities. This means that when those prices increase or drop, they directly impact the company’s level working capital and top line. Petrol hedges itself against changes in prices of all energy products its sells so it fixes the margins and changes do not influence its profitability. But in moments like this, when due to strong disruptions in energy flows Government interventions take place, and their profitability is also impacted. In its 1Q 2022 report Petrol has announced that under the Price Control Act which instructs the government to reimburse the economic loss and the lost profit as a result of fuel price limitation, Petrol submitted a claim to the Government of the Republic of Slovenia in the amount of EUR 51.3m for the period between 15 Mar and 30 Apr 2022. The part of the claim referring to the period of Jan–Mar 2022 has amounted to EUR 18.4m. This claim is not included in the financial statements of Petrol for 1Q 2022. This leads to the conclusion that the net profit of the Group in the amount of EUR 32.4m (+17% YoY) could have even been higher.
In relative terms, Telekom Slovenije is the company that has the highest difference in its turnover during these two time periods. When the market is green, its average daily turnover is EUR 59.9k, while when the market is red, it’s 15% lower, at EUR 52k. Considering they operate in a strongly regulated telecom sector, where changes to the operations do not happen so fast, and where most of the current negative factors do not have that strong of an impact, higher trading during the positive days is expected. The only other company that should be noted is Luka Koper, whose turnover is EUR 46.1k during the positive days, and EUR 53.9k during the negative days. Taking into account that the supply chain disruptions and COVID-19 lockdowns directly influence the company’s ability to do business, this isn’t surprising.
Increase/decrease in turnover on positive days compared to the negative days (%)
