This is normal to a certain extent against the backdrop of the big losses prompted by the outflow of foreign investors, the international market conditions and the lack of fresh resources by the mutual funds, which were left with no money on their hands.
This may be put down mainly to two factors. On one hand the people, scared by the market situation, withdrew their money from the mutual funds and on the other hand hand the funds suffered from the lack of fresh capital. The stock market slump was also depleting their free resources.
The market was in a dead-lock until a week or two ago when no one could give a logical explanation as to why the decline continues, which to some extent was predetermined by factors inherent to an “ineffective market".
There were no bids on many positions and plenty of asks especially after the companies released their first quarter results, which showed mixed results.
We saw a radical change in the sentiment on BSE over the last two weeks.
This momentum may be put down to the expectations for the influx of funds by foreign investors after the introduction of the Xetra trading platform on BSE.
So far things only seem normal. It is not uncommon for a market, which has lost over 35% in a six-month period, to post a recovery. This in no way is at variance with common sense.
The disturbing thing in the case is the speed at which some stocks recovered, considering the fact that some of these stocks are blue chips. The essence of this term implies certain sense of security as regards to investments in such companies.
This could translate into stability against market fluctuations and to a smaller extent a reaction against the negative factors. The movement of the blue chips in Bulgaria, however, is quite odd. A lot of blue chips registered declines bigger that these of the indexes during the downward correction on BSE.
Some of the blue chips reacted the same way to the upward correction on BSE in the last two weeks. Gains exceeding 30-50% posted in a matter of one or two weeks is definitely not very healthy. Some of the companies that posted such big gains included Holding Roads, the other infrastructure companies and Chimimport.