Bulgarian stock indexes registered significant declines during the first two months of 2008.
Not only did investors' expectations of a 'January effect' turn wrong, but the correction on BSE extended over February as well.
The blue chip index SOFIX has so far advanced each January, except for 2001 - the first year after its introduction, when it registered a slight fall.
SOFIX adds an average of 7.12% in January (excluding 2008), and an average of 9.56% in the first months of the past three years.
This, however, was not the case this January, when the index fell 20.6%.
The indicator lost 19.14% in January and February this year, which is its worst performance in history for the two respective months.
Until 2008, SOFIX was adding an average of 11.4% in January and February. In 2005 and in 2003 the advances in the first two months of the year contributed greatly to its annual results, which came to +45% and +32% respectively.
Some analysts say the decline so far in 2008 has been a consequence of the large gain last year and of the current situation of global markets. And while no one doubts in the second factor, the first explanation is questionable.
SOFIX rose 44.42% in 2007, while its average annual gain is 54%. Stock prices of Bulgarian companies soared last year, which adds to the impression of a record overall advance for BSE, which is not exactly the case.
2007 was the sixth year in a row that SOFIX ends up, so we may rather say the index's potential has been exhausted.
We may conclude that amid expectations of a global slow down in economy and rising inflation, the developing markets will see cautious foreign investing, and indexes' gains will be quite lower compared with previous periods.
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