According to ACEA, the European Automobile Manufacturers’ Association, the EU car market is expected to shrink by over a quarter compared to pre-pandemic 2019 levels.

ACEA recently published it is expected for car market to shrink by over a quarter compared to 2019, while a slight YoY decline is expected. Consequently, a new policy framework that enables the market both to recover and make the shift to zero-emission is urgently needed.

This new policy framework should include greater resilience in Europe’s supply chains, an act that ensures strategic access to the raw materials needed for e-mobility, and an accelerated roll-out of charging infrastructure, said ACEA President and CEO of BMW. As the coronavirus pandemic, semiconductor supply shortage and war in Ukraine heavily impacted prices and availability of energy – the interconnected consequences were felt.

Eight months into 2022, overall volumes decreased by almost 12% to reach some 6 million new cars sold. So far, the market was only constrained on the supply side as ongoing component shortages constrained production volumes. However, demand may also suffer over the coming months due to inflation and fears of recession.

Nevertheless, despite the contracting market and pressure from inflation and energy costs, the automobile industry continues to invest massively in R&D and in the skills and technologies driving the green and digital transition, said ACEA’s new Director General.

EU Car Sales

Source: ACEA, InterCapital Research

At the end of September 2022, the NAV of Croatian pension funds equaled HRK 129.4bn, which is a decrease of 2.3% MoM, and 2.7% YTD.

The Croatian Financial Services Supervisory Agency (HANFA) has published the latest monthly report on the developments and changes recorded by the Croatian mandatory pension funds. In the report, we can see that the NAV of the pension funds decreased to HRK 129.4bn, which is a decrease of 2.3% MoM, and 2.7% YTD, while on a YoY basis, this represents a slight increase of 0.2%. At the same time, net contributions into the funds amounted to HRK 719.6m during September, while since the beginning of the year, they amounted to HRK 6.1bn.

Mandatory pension AUM structure change (HRKbn, January 2018 – September 2022)

Looking at the main changes in the asset holdings, on a monthly basis, only deposit and cash holdings experienced an increase, growing by 9.8% or HRK 456.9m. Every other asset class experienced a decline, with share holdings decreasing the most, at HRK 1.78bn, or 6.6%, followed by bond holdings, which lost HRK 1.29bn or 1.5% of their value, investment funds, which lost HRK 573.3m or 4.1%, and finally, receivables, which decreased by HRK 353.7m, or 29.1% MoM.

Meanwhile, on a yearly basis, the situation is somewhat different. The largest decline was recorded by shares, which lost HRK 1.17bn of their value, or 4%, followed by the money market holdings, which decreased by HRK 275.7m, or 20.9%. On the other hand, bonds experienced an increase of HRK 1.44bn, or 2.7%, while deposits grew by HRK 345.6m or 0.3%, and finally, the money market holdings increased by HRK 312.9m, or 8.2% YoY.

What the yearly data can tell us is the fact that investments compared to a year ago into less risky types of assets, such as bonds and deposits increased. At the same time, riskier types of assets such as shares decreased. However, as the situation developed during the year, some changes were also recorded. As pension funds usually have higher net contributions into the funds due to the way the system is set up, there is an influx of cash every month. When we see the decline in the various types of holdings then, the majority of that decline comes from the loss of value in those types of assets. This is especially evident if we look at the monthly data, where we see declines in various asset holdings in millions and even billions of HRK.

Moving on to the asset structure of the pension funds, bonds still maintain the majority at 65.2% (or HRK 84.4bn), which is a decrease of 0.55 p.p. MoM, but an increase of 1.4 p.p. YoY. Following them, we have shares at 19.5% (or HRK 25.2bn), which is a decrease of 0.9 p.p. MoM, and 0.8 p.p. YoY. Investments funds are next, at 10.5%, (or HRK 13.6bn) which is a decrease of 0.2 p.p. MoM, and at the same level YoY.

Current mandatory pension funds AUM (September 2022, %)

Dividing the bond and equity holdings into domestic and foreign, we can see that the domestic bond holdings account for 93.1% of the total bond holdings, which is an increase of 0.6 p.p. MoM. Foreign bond holdings retained the remaining 6.9%. At the same time, domestic equity holdings account for 62% of the total equity holdings, which is an increase of 1.26 p.p. MoM, while foreign equity holdings account for the remaining 38%.