On October 22, stocks went down as many investors sold to raise money for the upcoming initial public offering (IPO) of infrastructure company Trace Group Hold on October 26.
Trace hopes to raise more than 11 million euro from the IPO. Analysts from Elana Trading Company said in a statement that Trace’s IPO would be heavily oversubscribed due to huge investor appetite for road infrastructure stocks and the small size of the offer. The IPO, in which Trace will offer 200 000 shares at a price of 110.50 leva, will be the first on the BSE by a roadbuilding company. Seven Bulgarian companies performed successful IPOs earlier this year. The offerings of two banks – Corporate Commercial Bank (Corpbank) and First Investment Bank (FIBank) attracted the strongest interest. Corpbank’s 58.5 million leva offering was 12 times oversubscribed, and in FIBank’s 176.5 million leva IPO investors offered six times more funds than the bank sought. “We expect huge oversubscription that will exceed substantially the previous IPOs this year,” Elana said in a research note.
Brokers told SeeNews wire agency that Trace’s IPO was the reason why the market was seen as volatile up to the end of the month. The Sofix index tracking the 17 most-liquid shares on the BSE fell 0.92 per cent to 1895.54 points, and the broad BG40 index lost 1.13 per cent to 588.72 points. “The market will be like that at least until the end of the month. I relate this to Trace’s IPO, because until the last minute no one will know how much money will be used in the IPO and there might be last-minute sell-offs,” Blagovest Krachev, broker at Karoll brokerage, told SeeNews.
Krachev said that companies’ nine month financial results, which are due by the end of October, were also likely to affect trading. Some company shares have gained a lot, helped by the overall positive market trend, and actual results might not justify the high prices, Krachev said. On October 22, 83 stocks fell, 44 rose and 22 closed flat.
Synergon Holding ended two per cent higher at 16.50 leva following a news conference held by the company’s management, which was seen as a sign of the company’s openness to investors, Krachev said. About 18 140 Synergon stocks changed hands.
Shares in cosmetics producer Aroma were in demand following the news that blue-chip drug maker Sopharma had bought 6.01 per cent of the company, but there were no sellers, Krachev said. A single Aroma share changed hands on Monday at 12.8 leva, down from 14.44 leva in the previous close. BSE’s turnover rose to 16.9 million leva for the day from 9.1 million leva on October 19. BSE’s BG TotalReturn30 (BG TR30) index, in which companies with a free float of at least 10 per cent have equal weight, edged 0.33 per cent down to 1180.29. The BG-REIT index, which tracks the performance of real estate investment trusts traded on the stock exchange, added 0.59 per cent to 103.83.
Ocotber 23 saw little change for the BSE performance. Stocks extended the previous day’s losses following recent sharp rises but no serious correction is seen up to the end of the year. The Sofix lost 0.5 per cent to 1886.05 points, and the BG40 depreciated 1.82 per cent to 577.99 points. The reason, according to Severin Vartigov, a portfolio manager at Benchmark Finance, was that market prices were outpacing financial results.
Bulgaria’s stock indices have risen sharply since the beginning of the year when the country joined the European Union. The EU entry gave confidence to foreign investors who have since poured significant amounts of money into the stock exchange in Sofia.
Vartigov supported Krachev’s opinion that indices would continue fluctuating for a month and gain or lose no more than five per cent. “No deep correction is seen up to the end of the year,” he told SeeNews. Most shares lost ground on October 23 with cosmetics producer Aroma being an exception, Vartigov said. Sopharma lost 0.4 per cent to 8.7 leva in volume of about 40 840 stocks.
