Today, we are bringing you a quick overview of the bid/ask spread of the Croatian and Slovenian blue chips in 2024 YTD.
First of all, a reminder: what is a bid/ask spread? In the context of a stock exchange, a bid/ask spread represents the difference between the highest price a buyer is willing to pay and the lowest price that a seller is willing to accept, for any share in question. In other words, the bid/ask spread represents the transaction cost for any given trade. As such, the lower the bid/ask spread, the more attractive a share could be for trading. Several things influence the bid/ask spread. Firstly, of course, the liquidity of a given share. Liquidity is tied to both the size of the share’s free float, the attractiveness of the share at any given moment, and the size of the overall stock market, among other things.
As such, the more liquid a share is, the more investors will trade it, and subsequently, the lower the bid/ask spread will be. The opposite is also true; illiquid and small shares usually have large bid/ask spreads, which in turn makes them even less attractive to investors, which creates a self-fulfilling circle. Secondly, the influence of a market maker. In short, a market maker puts a large enough amount of shares, available for trading by all investors on both the bid and ask side of the trading on an exchange, for a certain fee. Due to this, companies with market makers, even ones that are smaller and less interesting to investors can reduce their bid/ask significantly, thus making them more attractive in turn.
Croatia
Starting with the Croatian blue chips, the Croatian blue chips retained relatively small bid/ask spreads in 2024. Oscillations on certain days did happen when major news broke out, but on average the spread was quite small.
Average bid/ask spread of Croatian blue chips in 2024 YTD (%)
Source: Bloomberg, InterCapital Research
Out of the observed companies, Atlantska Plovidba recorded the largest average bid/ask spread at 2.6%, while the maximum was 16.2%. The company’s stock price experienced significant volatility and recorded a decrease of 7.5% YTD. This large bid/ask spread implies low liquidity, which can often be attributed to poor company fundamentals and adverse market conditions.
The next highest average bid/ask spread of 1.7% is recorded in Atlantic Grupa and HPB. Atlantic Grupa was trading at higher prices per share during the year, but since the end of March, the stock has been on a downward trend and currently stands at 0% YTD. Similar to the previous year, the stock experienced significant volatility, which is reflected in the spreads ranging between -0.9% and 3.8%. Regarding HPB, its spreads ranged between -1.1% and 4.6%. Despite this volatility, HPB continued its strong performance from the previous year and has achieved a 33.7% YTD return.
The rest of the observed companies had bid/ask spreads of 1% or lower, with Valamar Riviera recording the lowest spread at 0.4%. This indicates that Valamar Riviera has the highest liquidity among the companies observed. According to the ZSE’s report, Valamar had the highest turnover in the first half of the year. The company accounted for 7.8% of total equity turnover and achieved a 13.6% YTD increase.
Slovenia
Moving on to Slovenia, out of the 9 blue chips, 3 had average bid/ask spreads higher than 1%.
Average bid/ask spread of Slovenian blue chips in 2024 YTD (%)
Source: Bloomberg, InterCapital Research
Leading the way with the largest bid/ask spread is Equinox, at 5.6%. As the newest addition to the SBITOP index, Equinox is also the smallest company in terms of market size compared to its peers. Despite an 8.6% YTD increase in share price, the stock has exhibited significant volatility.
Next up are Luka Koper and Telekom Slovenije, both of which recorded solid double-digit growth with 25.7% and 24.8% YTD increases, respectively. The solid liquidity of both companies is evident. Despite Luka Koper not having a dedicated market maker and Telekom Slovenije having one, their average bid/ask spreads were quite similar, reflecting their strong market performance and investor interest.
Of the remaining Slovenian blue chips, all had a bid/ask spread of less than 1%. Given the overall size of the Slovenian market and the limited number of available shares for trading, a significant amount of trading is concentrated in these stocks, particularly in Krka, NLB, and Petrol. The other blue chips—Triglav, Sava Re, and Cinkarna Celje—also recorded solid liquidity in 2024. The presence of market makers plays a crucial role in their trading; even with high liquidity, it is unlikely that the spreads would be as small as they are without their support.
