Romanian, Croatian heavyweights share limelight on SEE bourses

by Gabriela Tzekova

 

Big fish in little pond
Romanian and Croatian heavyweights dominate the top of the list of the largest companies by market capitalisation in Southeast Europe at the end of last year. Еnergy, oil, banking and telecommuncation groups lead the Top 100 SEE ranking of the companies traded on the regional stock exchanges.

The market capitalisation of Erste Group Bank, which is listed in Bucharest

Vienna-based Erste Group Bank, which is listed in Bucharest, tops the ranking of SEE listed companies with market capitalisation of 5.25 billion euro at the end of last year.

Croatian oil and gas company INA-Industrija Nafte d.d. comes second in the ranking with market value of 5.05 billion euro. Tensions grew last year between INA’s largest shareholder, Hungarian sector group MOL, and the Croatian government, also a major shareholder in INA, as Zagreb accused MOL of acting as if it was the majority shareholder.

Romania’s OMV Petrom ranks third with market capitalisation of 3.8 billion euro. The positions of oil companies were cemented across SEE thanks to the surge of global oil prices above 120 U.S. dollars per barrel in the heat of the Arab Spring in 2011.

Croatia’s Hrvatski Telekom, whose market capitalisation of 2.63 billion euro makes it the fourth largest in the SEE region at the end of 2011, was affected by mixed news. Croatia wrapped up its EU accession talks and will join the bloc in 2013, which will force the telecoms group to lower its mobile termination and roaming tariffs. On the positive side, however, investors cheered Croatia’s decision to scrap its 6% tax on revenues generated by mobile telephony services . The Croatian parliament abolished the tax in July 2012.

The Romanian-Croatian dominance at the top of the ranking is interrupted by Krka, the Slovenian generic drugs company. Its market capitalisation of 1.87 billion euro puts it in the fifth place in the ranking.

Banking groups dominate the second half of the list of the 10 largest companies in the Top 100 SEE ranking. Romanian bank BRD, a unit of France’s Societe Generale, comes sixth with market capitalisation of 1.728 billion euro, Croatia’s Zagrebacka Banka d.d. ranks seventh with 1.725 billion euro, whereas another Croatian lender, Privredna Banka Zagreb d.d., is ninth with 1.2 billion euro.

Romanian investment fund Fondul Proprietatea, which owns stakes mostly in oil and energy groups, has market capitalisation of 1.36 billion euro that puts it into the eighth place.

The only Bulgarian company among the leading 10 in the ranking is energy group Energoni AD, coming tenth with 1.0 billion euro in market value. In April 2010 Bulgaria’s financial regulator imposed a temporary trading ban on Energoni’s shares on doubts over the proper valuation of the company’s 547 million lev patent for a wind farm construction method. The ban was lifted in June 2011.

Given the high profile of Croatian companies in the ranking, it is no surprise that the bourse in Zagreb is the leader in the region with 24.53 billion euro in combined market capitalisation of its listed firms in 2011. The Bucharest bourse, whose listed companies also are big-league in the region, comes third with their combined market capitalisation of 16.39 billion euro.

Surprisingly, the Ljubljana Stock Exchange ranks second in the region with 19.35 billion euro in market cap of its listed companies even though only one Slovenian company made it to the top 10 of SEE listed companies at the end of last year.

Bringing up the rear
The other SEE stock exchanges lag far behind the three regional leaders but their largest companies by market capitalisation also come from the energy, banking and telecoms sectors. Food companies also shine in terms of market capitalisation.

In Sofia, Energoni is followed by the Bulgarian Telecommunication Company and Petrol.

The pattern in Serbia is similar: oil group Naftna Industrija Srbije ranks first, followed by OTP Banka Srbija and dairy products maker Imlek. Another oil group, Lukoil Srbija, also is quite high up in the ranking.

In Macedonia, Komercijalna banka Skopje is leading the list, followed by pharmaceutical company Alkaloid Skopje and farming group ZK Pelagonija.

Montenegro did not offer surprises with its top trio: Crnogorska Komercijalna Banka, power utility Elektorprivreda Crne Gore and Crnogorski Telekom.

In Bosnia and Herzegovina, Sarajevo-listed BH Telecom tops the ranking. Its rival Telekom Srpske, listed in Banja Luka, comes second, followed by electricity generation and distribution companies JP Elektroprivreda BiH and JP Elektroprivreda HZHB.

Beating the odds
Traditionally reputed to be struggling with political instability and economic woes, Southeast Europe offered unexpected opportunities to investors in 2011. Stock market gains in the region reached up to 29% in U.S. dollar terms, according to estimates of the Financial Times.

Analysts have identified international support offered by the EU and the IMF as a key catalyst for the upward stock market trends in the region. In addition, unlike countries like Greece, Portugal and Spain, SEE countries managed to keep their macroeconomic indicators largely above water last year.