During 2023, Podravka was the only company to outperform the CROBEX10 index in terms of the number of days. In this quick overview, we bring you the details of why this happened, and why it might not seem as bad as it sounds.
During 2023, CROBEX10 managed to return an impressive 34%, based on the strong performance of many of its constituents. The stars of the show, however, are Podravka, HPB, Končar, and Span. These companies managed returns of 94%, 71%, 63%, and 41%, respectively, during 2023.
Price performance of CROBEX10, CROBEX10 constituents in 2023 (%)
Source: ZSE, InterCapital Research
As we can see, other companies did not slack off, however, with Atlantic Grupa, Adris (pref.), Valamar Riviera and HT are all offering double-digit returns. The only company to record a negative return was Ericsson NT.
How much did individual constituents outperform/underperform compared to the index (2023, p.p.)
Source: ZSE, InterCapital Research
Given the strong returns then, Podravka outperformed the index by almost 60 p.p., HPB by almost 37 p.p., Končar by 28.9 p.p., and Span by 6.6 p.p. The other companies, even with solid double-digit returns, underperformed the index by 9.5 p.p. for Atlantic Grupa, all the way to -46 p.p. for Ericsson NT. During 2023, there was a total of 250 working days in Croatia. Of all the CROBEX10 constituents, only Podravka outperformed the index in terms of better returns during these days. The remainder of the companies underperformed the index on this metric.
How often did CROBEX10 constituents outperform the index in 2023 (% of working days)
Source: ZSE, InterCapital Research
This brings us to an interesting conclusion and one that might not seem that obvious from the start. 2023 was an extremely good year for CROBEX10 and its constituents. As such, the high return recorded by the index was the weighted sum of the performance of the individual companies. In other words, if these companies gave returns on certain days, which by themselves might not seem much (especially when they’re weighted in the index), the overall index return was still high, since it takes into account all of their performances. When companies perform as well as most of these companies did then, they can significantly boost the index performance, leading to it “outperforming” them on those days.
As such, looking at this data by itself can be misleading. As such, it should be taken with other indicators, such as the price performance, or any other metric that one investor might be interested in. Still, 10 companies in an index do make things relatively simple. Imagine looking at an index such as the S&P 500, in which most of the companies have such low weights, that even if they gave a 100% return, a tiny increase in the index due to other companies’ performance (usually the largest ones) would still mean that the index would outperform that individual stock.
