IC Market Espresso 19 Jan 2022

CROBEX breaches  2,200 points

Yesterday, CROBEX noted a steep increase of 6.1% YTD and breached 2,200-point mark, repeating the continuation of almost uninterrupted positive sentiment on the Zagreb Stock Exchange in 2021.

CROBEX was last seen above 2,200 point mark back in March 2017, after which followed a decrease and a stagnation period (also, an outbreak of the pandemic). The index plummeted to as low as 1,364.98 back in March, after which a recovery followed. Since the March 2020 bottom, the index increased by as much as 61.6%. After lockdowns, followed by pandemic, the market is fully recovered with index up by 9.3% compared to the beginning of 2020.

In the first day of 2022, we have noticed a very solid performance of many index heavy weights. To be specific, Končar, Atlantic Grupa, Podravka, Valamar Riviera, Ericsson Nikola Tesla and others.

When observing the index constituents in 2021, out of 21 constituents, 12 were in the green, while 9 were in the red. The important thing to notice is that all heavily weighted blue-chip companies closed 2021 in green. Of the top gainer, Atlantska Plovidba by far leads the list with an increase of 155% YoY in 2021.

CROBEX performance since 2010

Producer Prices of Industrial Products up 19.6% YoY in December 2021

Producer prices of industrial producers on the domestic market increased by 19.6% YoY in December. The increase was mostly driven by an increase in the energy sector, however, if we were to exclude it, the increase amounts to only 4.3%.

Croatian Bureau of Statistics published new data on the trends in the industry sector, which reveals that the industrial producer price index went up by 19.6% on the domestic market. Excluding the energy prices, the total industrial PPI increased by 4.3% YoY in December 2021.

The aforementioned 4.3% increase is supported by other industrial sectors. Food production sector prices increased by 4.2%, beverage production sector went up by 0.8%, capital goods increased by 2.8%, durable consumer goods went up by 2.7%. All this is significantly impacting domestic producers which has made them increase prices to end consumers.

The growth of natural gas and oil prices is a direct result of increased demand in Asia (especially China and Japan) as well as the increased need for these energy sources in countries like Germany due to the shutting down of nuclear reactors. This is supported by the political situation in Europe which is marked by Ukraine – Russia tensions that have all created strong upward pressure on prices of these commodities. All this has resulted in a considerable increase in energy prices, which increased by 57.6% YoY.

Analyzing this even further, the main category which drives the energy sector price increase is indeed the mining and quarrying sector, which increased almost five fold YoY. The main driver of this increase inside the sector is the extraction of crude petroleum and natural gas, which increased almost eight fold YoY, which further supports the sentiment that the energy price increase was driven by these commodity price increases.

However, even with all increases, the PPI numbers on the domestic market remain on the similar level in the last 3 months (19.6% in October, 19.8% in November, 19.6% in December). This suggests that the worst of the price increases is over, barring some event that might disrupt the supply of natural gas and oil (like the escalation of Ukraine – Russia tensions).

Producer prices of industrial products for each month (% YoY)