(dpa) - Serbian blue-chip shares opened with big losses Thursday, continuing a negative trend that has been strongly highlighted by political instability and unlikely to go away any time soon, traders said.
"Politics dominate the Serbian market," said Mirko Stojcevic, an advisor with the Western Balkans Investment Fund (WBIF). "Money doesn't like surprises, stability is top priority for investors, so it isn't going to change for the better very quickly."
Shares have gone on a steady free-fall this week on news that Prime Minister Vojislav Kostunica's cabinet coalition shattered and that early elections would be held on May 11.
After Kostunica's announcement on Saturday, the market index fell 4.55 per cent on Monday, by 2.77 per cent a day later, followed Wednesday by an additional, dramatic 7.4 per cent.
On Thursday, the most sought-after shares opened with losses ranging between 2 and 10 per cent.
The Serbian market has been in steady recession, after bullish 10- month growth, since May. With the three politics-induced slumps, the indices have now sunk back to their levels of late 2006.
The news further polarized the political scene which already was sharply divided over the question whether Serbia should continue progressing toward EU membership or turn away in protest against Western support of Kosovo's independence.
It may be months beyond that date when Serbia would get a new, presumably stable government. But at the moment it is unclear whether it would have pro-European or an anti-European authorities.
Kostunica was forced to quit when his pro-European partners, led by President Boris Tadic, refused to cement Serbia's turn away from EU as he, with the powerful nationalist opposition, wanted.
The sharp decline of prices and turnover since is a replay of what has already happened when Kosovo declared independence last month and when Serbia seemed close to a far-right government last May.
Over the past 10 months, Serbia generally followed the regional recession trend, but the big dips are a "catastrophic synergy of bad moments," the trend and the political factor.
"The problem isn't in companies, even in the economy - it is the risk perception. That's why somebody who 10 days ago wouldn't sell shares of a healthy firm for 24,000 dinars now panics when he can't sell it for 17,000," Stojcevic told Deutsche Presse-Agentur dpa.
He estimates that the May elections would eventually produce a stable government and that investors would return to work in Serbia after that, regardless of who wins, because they want a "clear path."
"Of course, if the pro-EU bloc prevails, the growth rate would be steeper," he said. "If nationalists win, they would first have to prove that they will not shut down borders, drive out foreigners or do anything similarly stupid - and it isn't likely that they will."
Brokers at Italy's Findomestic Bank in Belgrade agreed, stressing that the investors had not fled, but instead were taking a low profile or even quietly collecting cheap shares.
"Now the market reflects the situation in politics. The economic indicators do not influence the price as much as other factors do," one trader told dpa.
In his estimation, the investors are lying low at the moment - which may last several months: "Most are waiting for the outcome of the political crisis and that may take months, maybe half a year."
Some may however be quietly purchasing good shares at bargain price for a certain gain later on.
In a "shallow," low-volume market, such as Serbia's at the moment, "investors with some cash may nudge the prices in their favour, and that also may be taking place without fanfare," the trader noted.