The total equity turnover on the Ljubljana Stock Exchange increased 14.9% MoM, while SBITOP grew slightly by 0.6% MoM, ending it at 1,199.45 points. We are in a period of dividend announcements and insurers have already announced dividends yielding between 6.4% and 7.3%. We are still waiting for the announcements of index heavyweights which are due in the middle of this month.
The total equity turnover on the Ljubljana Stock Exchange amounted to EUR 26.6m, representing a decrease of 63% YoY, and a solid 14.9% MoM increase. This would also mean that the average daily turnover in March amounted to EUR 1.2m. However, we note that the strong YoY decrease was exclusively due to exceptionally strong trading in March last year which amounted to EUR 72m. It was a period of strong geopolitical uncertainty, marked by the war in Ukraine, the start of sanctions, and the rise in the volatility of energy prices.
In terms of the indices, Slovenia’s main index, SBITOP, increased slightly by 0.6% MoM and ended the month at 1,199.45 points. At the same time, SBITOP TR also grew 0.6% MoM, ending the month at 1,516.45 points.
Monthly equity turnover on LJSE [January 2022 – March 2023]
Source: LJSE, InterCapital Research
In terms of the block trades, no block transactions were made during the month. Looking at equity turnover, the largest turnover was recorded by Krka, with a turnover of EUR 9.7m (or 36.7% of the total equity turnover), followed by NLB, at EUR 8.6m (or 32.2% of the total), Triglav at EUR 6.1m, Cinkarna Celje at EUR 1.5m (or 5.7% of the total) and Petrol at EUR 1.4m (or 5.2% of the total). In fact, this would mean that the top 5 most traded stocks accounted for 85.9% of the total turnover, while the top 10 would account for 98.5%.
Taking a look at the SBITOP constituents’ performance during the month, we can see that 7 out of 10 companies recorded growth during March, while only NLB noted a significant decline of 5.9%. The largest increase was recorded by Krka, with a growth of 2.9%. Krka was closely followed by Petrol with a 2.7% share price increase. Both of these companies drove SBITOP’s growth, offsetting NLB’s decline completely. NLB’s share price fell due to the pressure on banking sector share prices as the discoveries of weaknesses in the balance sheets have resulted in a collapse of three American mid-size banks while Credit Suisse is being taken over by UBS. In all cases, regulators jumped in either to devise a rescue or to lend against the collateral at face value. This all points to potential threats for banks of all sizes from rising interest rates. In the potential scenario, banks will have to start paying depositors more to stop them from taking out their money, which squeezes their margins and helps explain why some banks’ stock prices have plunged. The majority of banks have long-term bond portfolios whose prices have decreased during the last period so they have unrealized losses. These banks will be at a greater risk of failure during the crisis than the ones without such losses. In case depositors would start taking out their money, those banks could potentially be forced to cover deposit outflows by selling assets, i.e. bonds at market price. This is not an expected scenario with regional banks as deposits are still growing strongly and the majority of them are insured. But there is a threat that regulators could impose further capital buffers to secure the system has enough capital even in the case that unrealized losses materialize, or rates keep growing further.
Coming back to equity performance, Triglav and Cinkarna Celje noted a positive share price development with a 2.3% and 2.1% increase during the month, respectively. Finally, Sava Re and Luka Koper ended the month in green, both increasing by 0.4% during March, respectively. Further, we note that during March, both insurers proposed their dividend payment with DY for Triglav amounting to a solid 7.3%, while Sava Re offers an attractive yield of 6.4%. Triglav will pay EUR 2.5 DPS, which is the payment within its dividend policy and Sava will, this year, pay out a slightly higher dividend of EUR 1.6 DPS (compared to EUR 1.5 in 2022). Further, NLB, too, expressed its dividend plan with EUR 5.5 DPS payment during the year, while the payment will be coming in two tranches. Also, Luka Koper reported strong results too, which might result in a higher dividend compared to the year before. Finally, Cinkarna did not yet publish a dividend proposal. However, Cinkarna noted a very good year overall and currently market expects a 13% DY on the share price.
Performance of SBITOP constituents (March 2023, MoM, %)
Source: Bloomberg, InterCapital Research