Extraordinary market volatility led to another troublesome day for equity causing temporary trade suspension in Croatia.

At 09:43 am, CROBEX and CROBEX10 index declined 10.18% and 10.31% respectively compared to the previous day. Consequently, Croatian Financial Services Supervisory Agency at 09:45 am temporarily suspended trading on the ZSE until the end of the trading day. ZSE rules and Capital Market Act state that regulator may close ZSE in the case of extreme market volatility in order to protect investors.

Note that the index observed such a sharp daily decrease only once in October of 2008 when CROBEX dropped by 10.2%. Closing at 1,429.47 points, CROBEX reached the same level as in 2009 when the global financial crisis heavily hit Croatia’s equity market. YTD CROBEX recorded a decrease of 29.1%, while the index’s P/E multiple fell by 10.2% since yesterday.

During this brief trading session, the ZSE reported a turnover of HRK 8.6m, which is quite close to an average daily turnover. At the same time, 40 stocks ended in the red. The most traded shares were Valamar (RIVP) and Hrvatski Telekom (HT), with each recording a turnover of approximately HRK 1.4m. The most significant decline in the share price were evidenced by Arena Hospitality Group (ARNT), Optima Telekom (OPTE), and Valamar Riviera (RIVP) with a double-digit decline of 20.61%, 17.43%, and 14.17% respectively.

Meanwhile, uncertainty about the duration and severity of novel coronavirus spread caused a further decrease in other regional stock markets as well – SBITOP fell 8.96% and BET declined by 5.15%.

The ECB will launch new longer-term refinancing operation (TLTRO) at an interest rate as low as -0.75% and increase bond purchase programme by EUR 120bn in the coming months.

Following up on yesterday’s blog, the ECB announced set of tools to counter the economic shock caused the by Coronavirus. To be specific, the ECB stated that they would roll out cheap loans for banks, at an interest rate as low as -0.75%, and temporarily increase bond purchases under its EUR 2.6tr bond-buying program. The mentioned program, which is currently running at EUR 20bn a month, will be increased by a total of EUR 120bn through the end of the year, and focus on private-sector bonds (such as corporate bonds).

It is important to add that ECB did not cut their key interest rate, which came as a surprise, as such a move was expected by many investors after major central banks (including FED) announced large interest rate cuts in the previous days.

Looking at the markets, investors were not excited on the announced package, as it seems that they are waiting for the key thing – the number of infected individuals by coronavirus to decelerate. Furthermore, we are still waiting for the bigger fiscal packages coming from core EA countries and more details on tax cuts in the US.

Slovenian Securities Market Agency obliged Slovenian companies to reveal in audited report all financial effects of Covid-19 on their potential operating business, which have occurred after the end of the business year.

Slovenian Securities Market Agency published a document on the Ljubljana Stock Exchange announcing that the companies are obliged, according to Companies Act, to reveal in audited report all financial effects of Covid-19 on their potential operating business, which have occurred after the end of the business year.

Public companies will by revealing this also adhere to International Accounting Standards and Slovenia Accounting Standards, which requires them to qualify and quantify potential spread of Corona virus on its business operations and ultimately on its financial results.

As a result of the above stated, there is a possiblity that the companies will be delaying the publication of their FY audited annual reports. We will be keeping you up do date, as soon as more information arises.

The Group’s KFC stores in Italy account for about 10% of consolidated sales and the impact of this crisis in Italy is considered manageable at Group level.

Sphera Franchise Group published a document on the Bucharest Stock Exchange announcing that they target a significant development of KFC in Italy. The Group currently operates with 16 stores, most of them in the northern part of the country, and plan to open another 9 stores this year.

Sphera adds however that their development plan in full is at risk and will be revising their projections soon. They further note that the coronavirus crisis will adversely impact the Group’s current operations and the results for the period.

The Group’s KFC stores in Italy account for about 10% of consolidated sales and the impact of this crisis in Italy is considered manageable at Group level. The company notes that their first priority remains the health of their employees and customers and that they will fully comply with the decisions of the local authorities for the swift resolution of this health crisis.

Although Sphera remains committed in delivering their plan, they state that they cannot guarantee at this point its feasibility in terms of supplies required, human resources mobilization and other logistics or regulatory factors.