What to expect from the Bulgarian Stock Exchange in 2021?

At the end of each calendar year, we traditionally take stock of how it went, what the opportunities were and what to expect next year.

Unfortunately in 2020. was another for the domestic stock market gauges, in which they rank at the “top” places in the market rankings for the weakest performance and recovery from our onset of coronary crisis.
Usually the beginning of the year is the period during which portfolios are structured or restructured, as market conditions and macro-processes in the economy additionally have a direct impact on the volumes and turnover of capital markets. That is why the first months of each calendar year in most cases have always been good for our home market.
The observed growth in the last trading sessions of the calendar year is normal for the market, and for some of the issuers this is also due to repurchase procedures.

Unfortunately, the activity of the BSE in the past year remained at low levels, and the state of emergency had an additional negative impact on this.
In the next year, the activity will be directly linked to the expectations and data for recovery from the coronary crisis and its reflection in the financial statements of public companies. The trend of low interest rates on bank deposits will continue, which would favor the redirection of monetary resources to investments in securities. The easing of the tone in the US-China trade talks, as well as the situation around Brexit, will have an impact on the financial markets, although this will have a direct weaker impact on the country’s stock market.

Nevertheless, the situation on our domestic capital market, indirectly and through local mutual funds, provides excellent opportunities for acquiring undervalued financial instruments, respectively opportunities for better returns compared to other alternatives (real estate, deposits, etc.). Some public companies already take advantage of this through repurchase procedures, and we must not miss the fact that there are those who distribute part of their current profits in the form of advance dividends.

The presence of the first issuer – a candidate for offering the BEAM segment for small and medium enterprises (Growth Market) is a step forward and provides new investment opportunities for investors. Upon successful offering of the shares of Biodit AD on this market, it is logical to have interest from new issuers to take advantage of the market situation to raise additional cash resources necessary for their development.

As an additional event that will affect the main market and would provide new opportunities for investors next year is the provision of opportunities for trading in derivatives based on financial instruments traded on the BSE.

I expect in 2021. companies from the financial sector, special purpose vehicles, tourism, machine building, as well as those with traditions in the distribution of dividends should have a better performance.