Compared to 2021, 2022 was a year of a lot of uncertainty, volatility, and major macroeconomic and geopolitical developments. In this environment, we decided to bring you an overview of the regional stock exchanges, and in particular, the equity turnover.
As history will show us, 2021 was a year of strong recovery and growth that already started in 2020 as the perception of the pandemic, and the realization of the full effect of its impact changed. By comparison, 2022 was a year of enormous uncertainty and volatility in the equity markets, fuelled by overall macroeconomic and geopolitical upheavals (the Russian invasion of Ukraine, high energy prices, soaring inflation rates, interest rate hikes, etc.). As a result of these challenges, a lot of different asset classes suffered, with equity, and especially growth-orientated stocks, such as the ones in the tech sector, losing a lot of their value. Besides the global developments, it should also be noted that IPOs, large block trades, and similar events could influence higher turnover on a given exchange.
So, how did this spill over to the regional stock exchanges, did it result in an increase or a decrease in turnover?
Average daily turnover of regional stock exchanges (2013 – 2022, EURm)
Source: BVB, ZSE, LJSE, BELEX, BSE, InterCapital Research
As we can see in the graph above, the largest average daily turnover, and overall the largest turnover in the region was recorded by the Bucharest Stock Exchange, at EUR 10.4m (total turnover of almost EUR 2.6bn). Of course, this is to be expected considering the fact that Romania by the size of its economy and population far surpasses any other country in this comparison. Compared to 2021 however, the Bucharest Stock Exchange recorded an equity turnover reduction of 34.5%. Romania, besides being close to the conflict in Ukraine, was also under the influence of inflation and interest rate increases far more than countries that are part of the Eurozone, as their own currency in this case was also under increased pressure. Combined with the volatility and uncertainty we have seen in general in the equity markets across the world, the result isn’t surprising.
However, what’s also interesting is that if we look at the top Romanian index, BET, we can see that 6 out of 20 companies are energy production companies. As such, they benefitted from the surging oil&gas prices on the one hand but were also under strong regulatory pressure in the form of taxes (e.g. windfall tax, solidarity contribution), and as such did not record as much growth as they could have on the other. As such, the BET index declined by 10.7% in 2022.
Next up, we have the Ljubljana Stock Exchange, which recorded an average daily turnover of EUR 1.71m in 2022, or EUR 430.8m in total, an increase of 13% YoY. Compared to the average from 2013-2021, this is an increase of 16%. If we were to exclude block trades, then the avg. daily turnover would amount to EUR 1.53m. In terms of turnover by companies, Krka recorded the highest overall turnover, at EUR 171.6m, or a daily average of EUR 681k. Following them, we have NLB, at a daily avg. of EUR 298k, Petrol at EUR 156.9k, Triglav, at EUR 112.4k, and Sava Re, at EUR 89.3k. This would also mean that these 5 companies had a total of 87% of the entire equity turnover without trades in 2022.
Top Slovenian companies by turnover in 2022 (EURm)
Source: LJSE, InterCapital Research
After Slovenia, we have the Zagreb Stock Exchange, which recorded an average daily turnover of EUR 1.5m in 2022, or a total of EUR 376.1m. YoY, this is an increase of 13.6%, but a decrease of 1% compared to the average in the 2013-2021 period, implying a reduction in turnover. If we were to exclude block trades then the total turnover would amount to EUR 237.6m or an average daily turnover of EUR 0.95m. In terms of the stocks with the highest turnover, Podravka is 1st, at EUR 23.6m, and HT, at EUR 23.4m, both having app. 10% of the total turnover, respectively. This would imply an average daily turnover of EUR 94.5k and EUR 93.7k, respectively. Next up, we have Valamar Riviera at EUR 21.7m, representing 9% of the turnover, with EUR 86.8k in terms of the average daily turnover. Following them, we have Atlantska Plovidba, with a total turnover of EUR 18.3m, Adris Grupa, with a turnover of EUR 11.6m, SPAN at EUR 11.5m, and Ericsson NT at EUR 11m. This would mean that these 7 companies make up app. 51% of the total turnover on the exchange, while if we take the top 10, they would account for 63.6%. Here we can see the contrast to LJSE, where the turnover is a lot more concentrated.
Top Croatian companies by turnover in 2022 (EURm)
Source: ZSE, InterCapital Research
Finally, we have the Bulgarian and Belgrade stock exchanges, which recorded an average daily turnover of EUR 1.28m, and EUR 0.39m, respectively. This represents an increase of 21% YoY, and 40% compared to the 2013-2021 average for Bulgaria, showing us that the Bulgarian equity market is developing. On the other hand, the Belgrade Stock Exchange’s turnover was 20% lower than the 2013-2021 average, and if we look at the trend across the years, it was one of decline, with only 2022 recording some modest increases (as compared to 2020/2021).
Trading statistics for the whole 2022 show an average daily turnover of roughly EUR 0.3m (-28.2% YoY). Overall, total equity turnover declined by 39.5% YoY, primarily driven by lower block transactions, which fell by 61.1%.
The Macedonian Stock Exchange published its trading statistics for the whole 2022, showing an average daily turnover of EUR 0.3m. This represents a decrease of 28.1% YoY due to lower equity turnover, primarily driven by the lower amount of block transactions (-61.1% YoY). Looking at the data on a monthly basis, we can see a clear slowdown in equity turnover. The first 4 months represent as much as 49% of total turnover in 2022. From May all the way to the end of the year, we can see a gradual decline in equity turnover. We note only October is an exception due to the public auction for the big share package. Further, the total equity market capitalization on the stock exchange fell by 4.3% YoY.
When observing the top traded shares, one can notice that Komercijalna banka Skopje recorded the highest turnover of EUR 31.7m (or 28% of total equity turnover). Alkaloid Skopje follows with a turnover of EUR 13.9m (or 12.3% of the total), while NLB Banka AD Skopje is the third most traded stock with EUR 4.9m, representing a 4.3% of total equity turnover on the Macedonian Stock Exchange during 2022.
Of the MBI10 index components, we emphasize that each one of them reported a negative share price development during 2022, with Komercijalna banka AD Skopje noting the best relative performance with flattish price development of -0.4% YoY price decline.
Further, we note that currently, ZSE holds 30% of Macedonia’s Stock Exchange. During 9M 2022, ZSE noted a slightly lower bottom line, but higher sales, which amounted to EUR 2.8m (+ 13.4% YoY). A higher top line was achieved primarily from higher revenues from provisions and membership fees. Below we present you a Zagreb Stock Exchange’s share price.
ZSE Share price development in 2022
Source: Bloomberg, InterCapital Research