Based on the verdict, HPB will reverse the previously formed provision in the amount of HRK 89.11m. The mentioned amount will be stated as income in the P&L for Q2 2020.

HPB published an announcement on the Zagreb Stock Exchange stating that on 12 June 2020 it has received the second-instance verdict by the High Commercial Court in Zagreb dated 14 May 2020 by which the first-instance verdict is altered and the plaintiffs’ claim – by which HPB was order to pay an amount of HRK 80.34m together with penalty interest accrued since 10 March 2011 to the plaintiff Moj dvor građenje is denied.

The plaintiff is ordered to settle litigation expenses to the defendant by the same second instance verdict, amounting to HRK 1.3m within eight days. Based on the above verdict, HPB will reverse the previously formed provision in the amount of HRK 89.11m. The mentioned amount will be stated as income in the P&L for Q2  2020 within the item Provisions or reversal of provisions.

S&P expects the Slovenian economy to contract by close to 8% this year, as a result of the pandemic, followed by a 5% growth in 2021.

S&P Global Ratings has affirmed its ‘AA-/A-1+’ long- and short-term foreign and local currency sovereign credit ratings on Slovenia, with a stable outlook.

The stable outlook reflects the S&P’s expectations that the Covid-19 crisis will have a contained negative impact on Slovenia’s economy and public finances in the next two to three years, against a backdrop of strong existing fiscal and external buffers.

Downside scenario

S&P could lower the ratings if the fallout from the pandemic had a deeper and more protracted impact on public finances, with debt remaining on an upward trend, or if the damage to the economy was more severe and longer-lasting than they currently expect.

Upside scenario

S&P could raise the ratings on Slovenia if, following the temporary shock, the country’s economy was to return to its previous strong trajectory, boosting its GDP per capita without creating imbalances.

The growth outlook for the Slovenian, European, and global economies has deteriorated in 2020, mainly due to the COVID-19 pandemic and measures to contain its spread. S&P thinks that the past decade of private sector deleveraging and a decline of government debt to GDP since 2015 give Slovenia substantial buffers to weather the temporary shock without a lasting adverse impact on its credit metrics. At the same time, Slovenia’s economic expansion in recent years has been coupled with high current account surpluses, which helped reduce net external debt to 2.5% of GDP in 2019 from over 40% in 2012. Economic growth has been balanced, without emergence of macroeconomic imbalances. Taken together, these factors underpin S&P’s view that Slovenia entered into the recession from a much improved starting point compared with previous crises. They also think that the Slovenian government’s policy response, along with sizable ECB monetary support, will help preserve Slovenia’s productive capacity ahead of the recovery, which they project to take off toward the end of 2020.

S&P’s ratings on Slovenia continue to reflect the country’s high GDP per capita and its euro zone membership, which affords its small open economy the benefits of the ECB’s monetary policy. The current account is set to remain in surplus, while they project government debt will return to its downward path following the surge in 2020 as consolidation ensues from 2021. They also factor into their ratings Slovenia’s broadly stable and effective institutional framework.

Slovenia’s economy will contract sharply by almost 8% in 2020 as measures to contain the spread of COVID-19 have significantly deteriorated the global, European, and Slovenian growth outlook. The general government deficit will widen to nearly 8% of GDP in 2020, pushing net debt to almost 60% of GDP.

As a small, open economy, Slovenia is highly exposed to the economic developments of its key trading partners, particularly core eurozone economies such as Germany. Slovenia is tightly integrated into core European supply chains, notably German manufacturing. While Slovenia’s export-orientation has supported strong growth in recent years, it means that the supply chain disruption owing to the pandemic will strongly affect the country. However, in the medium- to long-run, with its strong export-oriented manufacturing sector, Slovenia could be well positioned if the pandemic were to trigger increased nearshoring and simplification of manufacturing supply chains. This remains uncertain at this stage though, and risks to global trade outweigh potential opportunities.

Fondul reported a total NAV of RON 10.23bn (EUR 2.11bn), (+7.5% MoM) which translates into a NAV per share of RON 1.5708 (+7.9% MoM).

According to the latest NAV report (29 May 2020), Fondul reported a total NAV of RON 10.23bn (EUR 2.11bn), which translates into a NAV per share of RON 1.5708.

When comparing it to the same period last year, their NAV remained relatively flat, while NAV per share increased by 11.9%. Meanwhile, when comparing MoM, Fondul’s NAV and NAV per share observed somewhat of a bounce back of +7.5% and +7.9%, respectively.

When observing the portfolio structure, it remains traditionally oriented towards the power, oil and gas sectors, whereby the two largest holdings, Hidroelectrica and OMV Petrom account for 61.77% of the total NAV.

Furthermore, when compared MoM, the Fund decreased their exposure to unlisted equities (-5.95 p.p.), which now make up for 68.53% of the total NAV, while they increased cash & receivables position by 5.35 p.p. Meanwhile, listed equities account for 24.72% of the NAV (+0.6 p.p.).

Turning our attention towards the share’s price performance, in May Fondul recorded a 11.2% increase, while as of 15 June, the share price amounted to RON 1.165, (-3.7% YTD). Note that the discount to NAV per share currently stands at 25.8%.