Stable government is more important to investors than GDP growth.
Analysts say that, in addition to extremely low liquidity, investment funds have been discouraged from buying Croatian companies’ stocks because of the political atmosphere in the country. The big players on the stock exchange market, such as pension and investment funds, would much more appreciate the stable government than GDP growth in order to be able to turn to Croatian stocks in a more meaningful way, reports poslovni.hr on May 31, 2016.
According to analysts, today’s first estimate of the GDP growth should show that the economy grew by about 2.4 percent in the first quarter. This would mean that the growth has accelerated compared to 1.9 percent in the fourth quarter of last year, and that the economy is improving for the sixth quarter in a row.
“In other words, the growth of GDP should bring better business results of the companies, and because the stock market is the place where the future business activities are being bought, not the current ones, this would mean that the prices of Croatian stocks would seem more attractive. But, the indication of the GDP growth will not be enough and it will not represent a sign for institutional investors to turn to Croatian companies”, said Goran Vorkapić, an expert for financial markets at the Hypo Bank.
"Stable government with clear goals would be more useful at this point than a good GDP indicator, as the fear of investors is still great because of the entire political atmosphere and the investment climate in the country”, said Vorkapić.
According to Hrvoje Krstulović, CEO of ZB Invest, GDP growth and other indicators that are showing a potential for the coming period, as well as the political stability accompanied with reforms and privatization, can have a positive impact on the capital markets. More investors would then be investing into Croatian funds, which would thus have additional means to invest in high-quality companies. Also, more Croatian companies would enter into the focus of investment decisions, said Krstulović.
President of the Board of Directors of the Zagreb Stock Exchange Ivana Gažić points out that the GDP growth reflects slowly on the recovery of the stock market in relation to the privatization or new listings. "Such projects could affect to a significantly greater extent the stimulating activities in the stock market", said Gažić.
