Today is the ex-dividend date for Krka. Usually, on the ex-dividend date, one can expect that the share price will decrease by app. the amount of the dividend yield. For Krka, the 2024 dividend yield amounts to 5.9%, and as such, we should expect a similar decrease in share prices.

This refers to the EUR 7.5 DPS approved recently by Krka, representing an increase of 13.6% compared to the previous year. In absolute amounts, the approved dividend amounts to EUR 230.9m, to be paid from the 2023 net profit of EUR 381.9m, implying a payout ratio of 60%. Meanwhile, the remaining 40% of the profit will be allocated equally (EUR 75.1m each) to other profit reserves, and retained earnings, respectively.

Based on the share price before the announcement, the dividend yield on this payment amounts to 5.9%. Due to this, we expect that the share price reduction recorded today will be similar to this number, or slightly lower, as the incentive from the dividend payment on the ex-date disappears. Of course, other factors can influence the share price as well, such as the macroeconomic and geopolitical environment, as well as the performance of the Company and its sector. To put things into context, Krka’s share price grew by 34.5% on a YTD basis. The payment date is set for 25 July 2024.

Krka dividend per share (EUR, left), and dividend yield (%, right) (2013 – 2024)

Source: Krka, InterCapital Research

Yesterday, we analyzed the bid/ask spreads of Croatian and Slovenian blue-chip stocks. Today, we turn our attention to Romanian blue chips, bringing you an overview of this metric for one of the most interesting markets in the region.

Compared to the Croatian and Slovenian stock exchanges, the Bucharest Stock Exchange is relatively large, despite being small by developed market standards. The main index of the BVB comprises 20 blue chips, while Croatia and Slovenia have 10 and 9 blue chips, respectively.

Romanian companies generally have solid market liquidity, with significantly higher retail investor participation. This makes Romanian stocks easier to trade, even in large quantities. Consequently, the average bid/ask spread for these companies is below 1%.

Average bid/ask spread of Romanian blue chips in 2024 YTD (%)

Source: Bloomberg, InterCapital Research

Additionally, 15 out of the 20 Romanian blue chips have at least one dedicated market maker, with more than a third having two, and Fondul Proprietatea boasting three. Even on specific days, the bid/ask spread remains mostly between 0% and 3%, with only MedLife exceeding this range at 3.6%.

Price change of Romanian blue chips in 2024 YTD (%)

Source: Bloomberg, InterCapital Research

Remarkably, this tight bid/ask spread persisted even as most Romanian companies experienced significant growth throughout the year. Twelve out of the 20 companies achieved over 10% growth, and nine companies exceeded 30%. However, five companies recorded negative returns.

The overall growth of Romanian blue chips necessitated frequent price increases in 2024. During these periods, the bid/ask spread widened but remained relatively narrow. This stability is a hallmark of a more developed market, creating a positive feedback loop that fosters further development. Good liquidity and low transaction costs attract more retail investors, enhancing liquidity and perpetuating the cycle.

Romania’s example offers valuable lessons for other regional markets. The coordinated efforts driving development in Romania could be emulated elsewhere. While Croatia and Slovenia have made progress, they could benefit from a more defined capital market development strategy, higher retail investor participation, better regulatory incentives, and new listings of companies, especially the government-owned companies (at least partially, as was done with Hidroelectrica in Romania), among other things.

Here you can find the dates for the upcoming events of the regional companies.

Due to the nature of these events, they are subject to change (might be postponed or canceled).