Current:
Belgrade Stock Exchange: 1146
Variation:
Yearly 30.75% Monthly 30.89%
Expected Return:
Q1 -3.14% Q4 -7.77%
The main stock market index in Serbia, BELEX 15, has experienced a remarkable increase of 273 points, rresenting a 31.17% rise since the start of 2024. This surge is attributed to trading on a contract for difference (CFD), which tracks the performance of this benchmark index from Serbia.
Looking ahead, analysts predict that the Serbian stock market (BELEX 15) is anticipated to reach approximately 1110.27 points by the end of this quarter, based on global macro models and market expectations. Furthermore, projections suggest it may stabilize at around 1057.23 points over the next 12 months.
Investment Strategy:
Given the data and market projections for the BELEX 15 index, a cautious approach is advised for the coming quarter and next year, considering the expected decline in returns and stabilization at lower levels. Here is a structured investment strategy:
1. Short Position on Index: With the current expected returns indicating a downward trend (-3.14% for the next quarter and -7.77% for the year), consider shorting the BELEX 15 index. This means taking a position that profits from the anticipated fall in the index value towards 1110.27 in the next quarter and potentially 1057.23 in 12 months.
2. Protective Call Options: To manage risk, buy out-of-the-money call options on the index. This will cap potential losses if the index unexpectedly performs better than expected. The cost of the call options should be justified by the anticipated decline, offering protection if the index moves above a set threshold.
3. Consider CFDs (Contract for Difference): Utilize CFDs for shorting the index if direct short sales are not feasible. CFDs can offer leverage and the ability to profit from declining prices without directly owning the asset.
4. Regular Portfolio Review: The Serbian stock market can be volatile with large historical variations. Regularly review the position at least monthly, monitoring macroeconomic indicators and potential policy changes in Serbia that may impact the index.
5. Diversification: Consider diversifying investment into other regional or global indices with positive outlooks to mitigate regional risks specific to the BELEX 15. This can balance the overall portfolio risk.
This strategy aligns with the anticipated market movements, providing a balanced approach with protection against adverse movements, considering both short-term and long-term perspectives.