The negative trend on global markets that started on January 21 and continued on January 22 took its toll on the Bulgarian Stock Exchange (BSE). The “black Monday” as January 21 was nicknamed by most of the media round the world saw Asian and European share indices fall sharply, prompted by the fear of recession in the US.

Exchanges around the region were all affected. Stock indices in Bulgaria lost an average of six per cent with the blue-chip Sofix index falling 6.59 per cent to end the day at 1391.92, the lowest close since June 2007. Romania’s key stock indices ended at levels lower than their opening values in 2007, while Croatia’s main index was down 4.83 per cent.

For the BSE, January 21 brought chaos and panic with many market players selling shares. The next day started in a similar way. In the first half of the day, key companies such as Monbat and Chimiport lost 12 per cent and 13 per cent, respectively. Cooperative Bank lost 14.56 per cent of its value. Some of the other firms with big losses were Bulstrad (23 per cent), Evroins (19 per cent) and First Investment Bank (eight per cent).

“People should not rely on fears and rumours when trading on the stock exchange,” Tsvetoslav Tsachev, head of analysis department at Elana Trading investment company told The Sofia Echo. “Indeed the situation was critical at some point but there were now signs of improvement and people should ask themselves the question of what actually changed in Bulgaria? The state of the companies, the state of other European stock indices? None of them changed in a negative way so it was more about psychological reasons,” Tsachev said.

What people had to do was to consult with their broker and after that take some actions if needed, Tsachev said. “This was not the first time the BSE had experienced such a change in its performance,” he said. “Indeed the negative trend that started last November had nothing to do with world markets but more with some traders having over expectations about the trading of certain shares, and the fall of global markets on January 21 added to that.” However, according to Tsachev one of the possible reasons for the fall on the BSE was that some players were closing repo (buyback) deals. In general Tsachev called for less emotions and a more considered view on the BSE.