CROBEX Largest Positions
Growth Drivers / Risks |
Growth Drivers:
- Frontier Markets (Tech & Consumer Goods) - Sound Infrastructure - Euro |
Risks:
- Debt - Government Funding - Agrokor |
Agrokor
Outlook
Overall, we see that the success of Croatia's financial markets revolves around a small amount of major companies as well as the growth opportunities that the EU has offered since joining in 2013. With those few companies making up a good portion of their financial success, that also comes with some risks. Agrokor, which many of their subsidiaries are some of these top traded companies, is in severe financial distress. In order for Croatia to save their single largest enterprise, they would have to accumulate even more debt than what they currently have. That would put them back a few steps with respect to fully adopting a market economy. The opportunity that we see with Croatia is that they are a smaller economy with a frontier market that has the opportunity, through the EU, to grow into a significant player on the world scale. This would pose as a solid investment opportunity since they are currently undervalued due to their questionable balance sheet. Their strength is appealing to the tourist by offering beautiful geography as well as high quality goods. If some of the top companies in Croatia could take advantage of this while also exploiting the opportunity to raise prices when adopting the euro, their debt would decrease by a significant portion and their financial markets could see a very large upswing, putting the CROBEX on the map as a very advantageous investment.