A week in the stock markets: Shares are cheaper, or the hawks have sharp claws – Commentary

A week in the stock markets: Shares are cheaper, or the hawks have sharp claws – Commentary
A week in the stock markets: Shares are cheaper, or the hawks have sharp claws – Commentary

This week the central banks played prim. Everyone was waiting for the decision of the US Fed. As expected, rates rose 75bb to 3.00-3.25%. Not even an accompanying comment adds to the calm. Rates will rise further and will be high for longer, high inflation and concerns about further economic growth are worrying central bankers. But that was not all the BoE (+50bb to 2.25%) and the last central bank to still have negative rates, the Swiss National Bank (+75bb to 0.50%), also raised their benchmark rates. The PMI indices, which still indicate a contraction in economic activity, did not help either.

American market

The main S&P500 index on Monday managed to correct the decline from the end of the previous week. But only slightly. More sales followed for the rest of the week. From Monday to Thursday, the S&P500 index lost 2.98% (3,757.99 points). Today it opens, unsurprisingly, below Thursday’s price, i.e. in the minus (-1.55%, 3,697.67 points) and falls lower and lower below the 4,000 mark. points. It will not improve its weekly performance, quite the opposite. Trading this week indicates a total loss of around 4.5%.

European stock markets

Individual stock indices in Europe today mostly lost more than 2%, when the opening of overseas markets did not help. Some indices, especially our closest neighbours, will even report by around 3%.

The European STOXX Europe 600 Index fell below the 400 mark, where it was last seen two and a half years ago. Today, shortly before the end of the trading session, it loses 2.18% (391.04 b.). It will be a loss of over 4% for the whole week.

Prague Stock Exchange

Friday

Today at the Prague Stock Exchange (and not only there) it looked as if someone had poured red paint over the entire monitor. And it couldn’t be cleaned with thinner. All titles weakened. The main index fell by 2.55% (1,168.13 points) and today’s performance ranked among the worst performances since the beginning of the year. A sad statement, unfortunately.

Today it was seen that the global environment is not very favorable to stocks. Erste (-5.25%, CZK 578), which corrected the high growth of recent weeks, Philip Morris CR (-2.81%, CZK 16,620) and VIG (-2.16%, CZK 544) pushed the stock market down the most. However, other heavyweights such as Komerčka (-1.85%, CZK 635.50) and ČEZ (-1.81%, CZK 923) did not help either. One of the worst performances today was seen at Pilulka (-4.88%, 780 CZK), however, with traditionally low liquidity, when even a small order can significantly affect the exchange rate.

A table with daily and weekly performance of indices and stocks is at the end of this commentary.

Prague Stock Exchange

Weekly performance

Philip Morris CR (+1.84%, CZK 16,620) was the best performer for the whole week, which strengthened before the half-year results (see below). The end of the week was interesting for PMČR (Thu +4.78% and Fri -2.81%) due to the high volatility on both sides. Colt finished just a hair behind him and added +1.82% (CZK 558) for the whole week, having strengthened at the beginning of the week before the publication of the quarterly report (below), after which it corrected its performance. Kofola (+0.73%, 276 CZK) was the last one with a positive weekly performance and third in the group of winners. Its price was helped by the approval of the dividend (below), although it was expected, but in this difficult time not only for shares, it is probably perceived as an anchor.

The opposite end of the starting field is difficult to comment on. Losses were substantial.

First about the index, the main indicator of the Prague Stock Exchange PX literally fell by 4.27% (1,168.13 points). About the third worst weekly performance since the beginning of 2021!

Erste (-8.72%, CZK 578) and Komerční banka (-5.15%, CZK 635.50) were the worst and corrected the growth of the last weeks. And when ČEZ (-3.70%, 923 CZK), which has the highest weight in the index, was added to it, the mystery of why the entire PX index weakened to a record is solved. The worst thing this week was Pilulka (-10.34%, 780 CZK) and that without significant price-changing news.

A table with daily and weekly performance of indices and stocks is at the end of this commentary.

Significant price-setting news from the Prague Stock Exchange

Half-year results were presented by Colt CZ. The results have grown decently in a year-on-year comparison. However, demand in the second quarter itself has decreased, but is still at a very high level. According to the management, it just moved on to other types of products. On the plus side, management plans to pay out 50+% of earnings as a dividend instead of the original 33%. Our evaluation is here https://bit.ly/CZG_1H22.

Kofola and its shareholders approved a dividend of CZK 11.30 per share at the general meeting (voting per rollam). The dividend means a gross yield of over 4%. There is more in our comment, which can be found here https://bit.ly/Kofola_apprdivi_CZ.

What can we expect next week?

On Friday, September 30, Philip Morris CR will report its half-year results. You can find our estimates here https://bit.ly/PMCR_e1H22. At PMČR, the most important thing is the dividend. The figures for the first half of the year indicate a total dividend of over CZK 1,300 (8% gross dividend yield).

From Thursday, Kofola’s shares should be traded without entitlement to last year’s dividend. The general meeting approved the payment of CZK 11.30 per share (gross yield of approx. 4%). It is usual that the share price on the so-called ex-dividend day weakens precisely by the amount of the dividend.

The article is in Czech

Tags: week stock markets Shares cheaper hawks sharp claws Commentary

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