Outlook 2017: Bulgarian stocks continue on the upside, attracting new investment and IPOs
Sofia bourse blue-chip index SOFIX will add 20% gains more in 2017 after the lucky approx. 30% profit for investors in 2016 – this is what ELANA Trading chief investment consultant Tsvetoslav Tsachev wrote in the annual predictions on financial markets.
The analysis of the Bulgarian stock market says investors’ mood has been diverted towards positivism in H2 2016 and this major factor joins the demand for higher yields from the savings running away from 0% bank deposits. New IPOs are coming soon, although until publicly announced, it is still not sure – at least two debuts are rumored.
Economic recovery in Europe will bring more positive impact on the Bulgarian public companies, especially the industrial exporters to EU, which will report improved profits. Banks on the stock exchange will also report improved earnings due to increased credits and the significant reduction of provisions.
Where will investors stand?
Tsachev claims large investors in Bulgarian stocks will continue stocking with the blue chips, although he expects stocks out of SOFIX will rise more during the year. “It is beginning to resemble 2006 more and more, when speculative money was shifting towards less liquid stocks just because of the expectations for higher short-term gains.”
Regular long-term investors will stay with dividend stocks, which will contribute again nice yields after average 4% in 2016.
SOFIX correction can be expected in view of foreign negative wave but it will be limited to 5-10%, which at the current levels of liquidity and spreads does not represent a considerable price change.
Read equity research reports of companies on the Bulgarian Stock Exchange