Greater interest in purchase of shares is a result of low interest rates and the growth of GDP, consumption, industrial production and tourism.
In the last two years, Croatian citizens have doubled the purchase of domestic shares at the Zagreb Stock Exchange. According to the statistics for September, Croatian citizens own 15.2 percent of domestic securities, which includes shares and bonds. The value of shares owned by citizens amounted to 60.2 billion kuna, in addition to 1.7 billion worth of bonds, reports Večernji List on October 13, 2016.
Looking at annual levels, in the past five years the lowest share was recorded in 2013 when citizens owned less than 7.5 percent of shares. In absolute terms, three years ago, citizens owned 23.2 billion kuna worth of shares and 1.3 billion kuna worth of bonds. However, significant buying of shares started a year later.
The fall in interest rates is certainly the main reason for the increased tendency of “small” investors to take risk and seek alternatives to bank deposits in order to preserve and increase their personal wealth, which has consequently intensified their return to domestic stock exchange, says Luka Grgić, an analyst at Zagrebačka Banka.
“In addition to low interest rates, this trend has certainly been significantly helped by the growth of macroeconomic indicators – GDP, consumption, industrial production, and excellent tourist season, which brought optimism after years of economic recession”, explains Grgić.
Ivana Gažić, the CEO of the Zagreb Stock Exchange, shares his view. “We often say that a stock exchange is a barometer of the entire economy. We believe that these statistics show the beginning of a stronger recovery of the domestic economy. The stabilization of political situation could be a new positive signal because capital does not like uncertainty and volatility, especially in the area of tax policies”, adds Gažić.
On the other hand, during the last three years the relative share of domestic companies as owners of shares decreased from 51.9 to 45.2 percent. As for the foreigners, the value of their shares increased from 76 billion kuna in 2012 to 100.3 billion kuna in September of this year. Moreover, this year brought an end to a multi-year trend of declines in the value of bonds held by foreigners.
“Despite the trend of decline in yields on bonds, Croatian bonds still offer a solid yield in comparison with some other countries”, explains Grgić.
