For today we are bringing you an overview of the share price performance of various sectors in the regional market from the beginning of 2022.
For this, we observed primarily the median YTD share price performance of companies in our wider coverage from Croatia, Bulgaria, Slovenia, Romania, and Serbia.
The end of 2021 was marked by positive sentiment on the regional equity markets, following the high vaccination rates, while a similar positive trend seems to be the case in the beginning of 2022 with most industries being in the green and some of them having YTD median share price change of 0% (apart from Infrastructure and Energy – reporting a decrease in mentioned category).
Observing the graph below, we can see that the banking sector has by far the largest increase with the median YTD share price increase of 9.7%. Banks remain positively correlated to bond yields and therefore higher yields could be a solid benefit to them. The same applies to insurance. Insurance, also belonging in the financials, reported a slightly worse median of YTD share price performance of 1.8%. Hawkish monetary policy by the same rationale applies for insurance.
The banks are followed by Diversified, with also high median YTD share price performance of 5.9%. The growth in this industry is mostly driven by the higher inflation and thus the higher price of goods these companies sell. This industry is mostly driven by Petrol and Podravka. Petrol reported very strong results during 2021 with high double-digit growth in sales YoY, while also increasing its bottom line and profitability on the level of 9M. Podravka also reported growing sales and it increased its operating profitability and bottom line. Shares of companies with low debt and lots of cash tend to appeal to investors who are putting their money to work as interest rates are rising. Petrol made a large acquisition of Crodux at the beginning of 2021, to be consolidated in the full-year results. On the other hand, Podravka is still not increasing its leverage but has announced investments in order to increase operating profitability.
Food, Funds/REITs, Telecommunication, and Insurance follow with median YTD share price increase of 2.1%, 2%, 1.8%, and 1.8%, respectively. As we are surrounded by a bullish monetary policy environment, investors are looking for assets that will perform well when interest rates are rising but also assets that could safeguard them from inflation. Therefore, Real estate investment trusts could be interesting to investors as these are securities that offer the opportunity to make diversified real estate investments without having to manage properties. Still, the best YTD return in Funds/REIT’s segment was performed by Romania Fondul whose portfolio return was mainly boosted by an increase in its holdings in Hidroelectrica and OMV Petrom. Hidroelectrica and OMV Petrom are also two holding with the highest share in Fondul’s portfolio.
Furthermore, Pharma and Shipping were also in green, both increasing YTD by 1% and 0.3%, respectively. Industrials, Tourism, and Utility didn’t report changes in median YTD share performance. The lowest median YTD share performance was reported by sectors Energy and Infrastructure with -1.8% and 0.8% YTD change, respectively.
