The main Bulgarian stock market index SOFIX booked its best performance in 2.5 years with 19% YTD rise before the end of 2016, heading for its 2014 highs. 3Q16 alone was the best quarter over the same period when the index added 11% q/q. Upside remains considerable despite the renewed political turbulence.

Outperforming regional peers, yet valuations remain attractive

The results delivered by SOFIX outperform all CEE regional peers by 5%+ while the global frontier markets lag behind by more than 10%. Valuations yet remain attractive with a SOFIX ttm P/E at 10.4x as fundamentals advance in line with valuations on strong economic performance in all representative sectors, including industrials, tourism and finance.

Turnover almost tripled y/y in 3Q16

The market depth also improved registering highest average daily turnover in three years. The latter almost tripled y/y to BGN 1m in 3Q16 for all equities with SOFIX components and new SOFIX ETF among most traded positions.

First ETF on SOFIX driving demand

Expat Bulgaria SOFIX UCITS ETF, first ETF on SOFIX, introduced to the market in the last day of Sept. 2016, immediately drove index stocks’ demand up. The ETF attracted considerable inflows from local institutional investors and individual professional investors.

Read more in Bulgarian Equity Strategy, prepared by ELANA Trading analysts