The Bulgarian Stock Exchange (BSE) fell behind the robust rallies staged on markets across Europe, with indices failing to sustain the decent gains they made in the early hours of trading.

Dnevnik 20, which follows the performance of the stocks with the biggest market capitalisation and liquidity, and BGREIT of the property funds bucked the trend.

Trading volumes totaled less than BGN 1 million.

Lead and zinc producer OCK led gainers with a 8% rise on the news that the environment ministry has passed a report that will enable the company to press ahead with a planned upgrade and expansion of its zinc capacity. Its stocks were also propelled by an increase in metal prices on commodity markets.

As the BSE lurches forward, most developing markets in the world are picking up momentum. Propped by precious metals exporters the MSCI Emerging Markets index hit a 13-month high. On Wednesday, gold struck a new record at USD 1,048 per troy ounce.

Gold glittered on European stock markets as well, where investors snapped at metal and mining stocks, fuelling solid growth.

(Dnevnik)

Bulgaria and Romania will undergo a significant deterioration of assets over the next 12 months, with banking loan default creeping up to around 15-20% of the sector’s total portfolio, according to a new report by Deutsche Bank Research (DBR), the research arm of the German banking heavyweight.

Looking at the economies of Central and Eastern Europe, the Baltic nations, Russia, Ukraine and Kazakhstan, the analysts predicted that nonperforming loans will peak in 2010, expecting the deterioration to continue at least until mid-2010 in Eastern Europe.

Stress tests conducted by the Bulgarian National Bank (BNB) estimated that bad loans could make up 16.5% of the total by the end of the year, triggering writedown costs of between BGN 1.944 billion and 3.305 billion. The system capital adequacy ratio of 17.6% could drop to the range 14.5%-11.6%, comfortably high above the 8% regulatory requirement for the EU and the US.

Stress tests on the CEE banks reveal that banks’ solvency would shrink near or even beneath the regulatory requirement in case of a sharp deterioration in the quality of assets, according to DBR. Loan defaults will peak at between 10 and 50% for the different countries.

The report ties up with a recent analysis by UniCredit Group, which forecast that loan defaults in Eastern Europe will hit their worst in 2010. However, the institution pointed out that the currency board mechanism pegging the lev to the euro is guarding Bulgarian banks against steep rises in loan defaults.

Bad and restructured loans accounted for BGN 2.75 billion in end-August, or 7.4% of all corporate and household loans, overdrafts excluded.

(Dnevnik)

Bulgarian engineering, construction and energy group Enemona unveiled a 12% year-on-year increase in non-consolidated profit to BGN 6.4 million for the nine months through September.

The company posted a 21% rise in non-consolidated revenue, which topped BGN 69.38 million over the period under review.

Enemona’s non-consolidated report excludes the performance of its subsidiaries, which represent a significant part of its operations.

With the economic downturn high on its mind, the group plans to strictly comply with contracts with financial institution in a bid to avoid having to repay loans before the end of the repayment period.

Other measures to counter the crisis include limiting spending on non-core operations and a revision of its entire investment plan.

The company also plans to insure its major receivables, speed up payments collection and stick to only solvent investors such as government institutions or companies implementing state-guaranteed projects.

It will also apply for European funding to bankroll energy and energy efficiency projects.

Enemona’s shares tumbled by 1.18% to BGN 11.60 on the Bulgarian Stock Exchange (BSE), where it is listed for trading.

(Dnevnik)

Bulgaria will not discuss a possible entry into the ERM II -- the exchange-rate mechanism, the European Union’s two-year currency stability test before the country can drop the lev and adopt the euro -- before February 2010.

Backtracking from plans to seek admission to the system from November, finance minister Simeon Djankov told a session of the Council of Ministers on Wednesday that Bulgaria’s application could be only considered after all members have filed their convergence programmes in compliance with the January 31, 2010 deadline, which is an extension of the previous November 30, 2009.

Before submitting an application, Bulgaria has to pass its 2010 budget, which is still in the making even though the government discussed the major assumptions at its Wednesday session. Djankov was tight-lipped about details but said planned pension expenses will be BGN 1.35 billion higher than for 2009.

The bill is pending coordination with the other ministries and the national tripartite cooperation council, a structure which brings together government, employer and employee representatives.

As it braces itself up for a 2% recession and lower revenue next year, the Bulgarian government will rein in expenditure but update its budget after June 15 if the economy shows signs of recovery.

Reuters agency reported that analysts expect Bulgaria’s ERM II entry will be an uphill struggle as the countries sharing the euro are not keen to be joined by a new member at a time when the economy is in the doldrums. Some of them are even surprised that Sofia is publicly sticking to its plans given that Brussels is sending out negative messages. The new Cabinet dominated by right-of-centre GERB plans to adopt the euro in 2013.

(Dnevnik)

Healthcare contributions will be divvied up in a 50:50 ratio between employers and employees as of 2010, according to legislative amendments proposed by ruling party GERB and the Health Ministry that should replace the current 60:40 system.

While workers will shoulder a higher portion of the amount, the government has already fleshed out plans to lower the total social security burden by 2%, the ministry said.

The healthcare contribution will be left intact at 8%, with all if it channeled to medical services.

The self-insured will be required to submit monthly declarations with the National Revenue Agency (NRA) that they have paid their healthcare contributions or risk fined ranging between BGN 500 and 1,000. Employers shirking contributions will be slapped fines of BGN 2,000 to 8,000. Self-insured who have skipped payments for more than three months will be punished by BGN 500 to 1,000.

Out-of-hospital doctors will be fined between BGN 500 and 5,000 if they fail to provide 24/7 access to phone consultations. Those reporting sham medical services will face BGN 3,000 to 10,000 in fines. The violations will be established by a future Medical Audit agency, with the collected fines flowing directly into the state budget.

The stringent regulations provoked a storm of criticism from doctors and dentists, with Bulgarian Dental Association (BDA) chairman Nikolay Sharkov warning the hefty fines will force the skilled dentists to walk out on the National Health Insurance Fund (NHIF). His opinion was echoed by Bulgarian Medical Association (BMA) chief Tsvetan Raychinov, who reckons the tough sanctions will force many doctors abroad.

(Dnevnik)

Pressed by economic woes that sapped once abundant liquidity, Bulgarian banks are still intent on accumulating resources, according to the latest report by Moite Pari, the local financial advisors.

Over the last month, lenders extended promotions offering mouth-watering deposit interest rates but none of them put up rates and a number even cut them down.

Eleven lenders have tweaked their short-term deposit offers, with some extending promotions, others launching new products and still others venturing to slightly cut rates.

At the same time, several banks lowered loan rates, giving a fillip to the mortgage market at the start of the new business season.

Credit consultants Credit Center also registered better credit activity in September, saying loan inquiries increased by 15% from the month before backed by a modest drop in interest rates, with rates shedding between 0.2% 0.8% on preferential euro-denominated loans and between 0.5% and 1% on their local-currency counterparts.

The average mortgage rebounded to EUR 32,609. In a sign that the luxury property segment is coming back to life, borrowers ventured to take upwards of EUT 70,000 and even 100,000. Some lenders have lifted the funding to between 70% and 80% of the property cost, mostly for deals struck at lower prices than what are typical of the area and the type of real estate. Otherwise, most property buyers get around 50% of the total cost.

(Dnevnik)