Financial news

Foreign direct investment (FDR) in Bulgaria's non-financial sector in 2014 amounted to EUR 21.953 bln, decreasing by 5.9 per cent compared with 2013, according to early estimates published by the National Statistical Institute on Monday. Non-financial-sector FDR was largest in industry, at EUR 8.945 bln, and in services (including trade, automobile and motorbike repair, transport, storage and posts, hotels and restaurants), at EUR 4.576 bln. Taken together, these two sub sectors accounted for 61.6 per cent of FDR in the non-financial sector, decreasing by 2.9 percentage points compared with 2013. In construction, FDR amounted to 994 million euro, increasing by 7.0 per cent. In 2014, expenses for tangible fixed assets (TFA) in all sectors of the Bulgarian economy totalled BGN 21.493 bln, up by 18.8 per cent compared with 2013. The largest share of TFA expenses were incurred in industry, at BGN 6.287 bln, and in services (including trade, automobile and motorbike repair, transport, storage and posts, hotels and restaurants), at BGN 4.815 bln. Taken together, these two sub sectors accounted for 51.7 per cent of total TFA expenses. In construction, TFA expenses amounted to BGN 1.928 bln, up by 48.3 per cent.

Bulgaria’s Finance Ministry said that the consolidated Budget surplus in the first seven months of 2015 came in at 789.4 million leva, or 0.9 per cent of the forecast gross domestic product (GDP), an improvement of 2.3 per cent of GDP compared to the same period of last year, when the consolidated Budget showed a deficit of 1.15 billion leva. July marked the second consecutive month of declining surplus, after peaking at 1.09 billion leva in May. But the decline fits in the annual trends, where summer months mark higher Budget spending than revenue; it also fell short of the 801 million leva surplus forecast by the Finance Ministry a month earlier. The ministry said that the high surplus this year was the result of improved revenue collection, while spending remained roughly unchanged compared to 2014. In August, the surplus is expected to shrink further, to 601 million leva. In the first seven months of the year, the state Budget had a surplus of 406.3 million leva and the EU funds surplus was 383.1 million leva. Bulgaria’s contribution to the EU budget for the first seven months of 2015 was 540.3 million leva.

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	Mineral Fuels, Tailoring Products, Canning, Perfumery and Cosmetics, Furniture, Meat Products, Wine, Wood-processing Industry

Companies

The number of non-financial enterprises grew last year and was the highest since 2008, before the economic crisis. Employed in them also increased, but remain less than in 2010 and 2011, data of the National Statistical Institute shows. Last year the nearly 320 thousand operating companies produced output for BGN 129.258 billion. More than one-third of enterprises are engaged in activities in the sector "trade, repair of motor vehicles and motorcycles." The value of production of these products, however (and logical) is much lower than that produced by enterprises in manufacturing, as well as those in construction. Most noticeable is the fastest rate of companies in the IT sector: from 8114 in 2010, they reached 10,721 in number in 2014. Value created by their production rose from BGN 6.154 billion in 2010 to BGN 6.805 billion. For the same period, their employees increased by about 10 thousand people to 77,225.

Company for real estate investments Arco Vara is registered in late July as a real estate investment trust (REITs). The initial paid up capital of the company is EUR 256 thousand and the majority shareholder is Estonia-based Arco Vara AS. It owns 70% of the shares of the new fund and the remaining 30% are owned by local financial institution. Newly created Arco REIT will apply for license for management company and for authorization for listing of the shares on the Bulgarian Stock Exchange - Sofia. After receiving authorization, the plan of the company is to conduct an initial public offering of shares in 2016. Through the company's listing on the stock exchange, it will allow Bulgarian capital to be directly invested in new projects of the company, said the Estonian investor.

The Bulgarian government has proposed a package of energy cooperation projects to Azerbaijan. It remains unclear if the massive deal is part of a swap of property linked to a plan to divest 17% of Azerbaijan's shares of Greek gas operator DEFSA to a third country. Bulgaria is reported to have invited Azerbaijan to participate in the construction of filling stations, and to invest in the construction of oil and gas storage facilities, and refineries. Bulgaria has only one refinery near the port city of Burgas, owned by the Russian company Lukoil, which has been designed to process only Russian crude. Bulgarians frequently complain of Russia's monopoly of the fuel market, as a result of the dominant position of Lukoil. "At present, the Azerbaijani side is examining these projects and their profitability," the Azerbaijani ambassador to Bulgaria Emil Karimov said. Bulgaria is also interested in purchasing Azerbaijani gas, and its government has already committed to purchase one billion cubic meters of gas per year (bcm/y), when Azeri gas will start flowing through the Southern Gas Corridor (see background).

A huge number of Bulgarian companies will go on trade missions in the city of Almaty, Kazakhstan, from 1 to 6 September, 2015. The delegation is composed of 24 companies and is led by Deputy Director of the Executive Agency for Small and Medium-sized Enterprises (EASME) Nicolay Stoyanov. The companies are from the sectors of construction, building materials, furniture and interior design. Within trade missions will be organized Bulgarian-Kazakh business forum with conducting b2b meetings. The forum will be held on 3 September in Almaty. The event is organized by EASME, Office of Trade and Economic Affairs Astana, Embassy of Bulgaria in Kazakhstan and the Foreign Trade Chamber of Kazakhstan (a sister organization of the National Chamber of Entrepreneurs of Kazakhstan). The missions are on the project "Promoting the internationalization of the Bulgarian enterprises", financed under Operational Programme "Development of the Competitiveness of the Bulgarian Economy 2007-2013".

Bulgarian construction company Trace Group Hold said its consolidated net profit fell to BGN 4.16 million in the first half of 2015 from BGN 4.64 million a year earlier. Consolidated sales revenue declined to BGN 140 million from BGN 152.7 million in the first half of 2014. Expenses dropped to BGN 131.2 million in the first six months of the year from BGN 141.4 million in the same period of 2014. The company's total assets rose to BGN 264.5 million at the end of June, as compared to BGN 236.9 million at the end of 2014. Total liabilities rose to BGN 152.9 million at the end of June from BGN 125.1 million in the first half of 2014. Trace Group Hold's activities include rehabilitation, reconstruction and construction of roads, highways, airports, underground stations and underground railways, ground railroads and facilities, urban infrastructure and road marking.

Europe

Russian oil giant Rosneft has reported a sharp drop in profits due to lower oil prices. Net income between April and June was 134bn roubles ($2bn), down 22% compared with a year earlier. Revenue was 1.3tn roubles. Despite the drop, the results were better than analysts had expected. In the second quarter last year, the price of oil was more than $100 a barrel, while this year it ranged between $55-$65. The weak rouble helped to offset lower prices - Rosneft sells its oil in dollars, so a weak currency means the price of oil in roubles rises. Despite the sharp fall in the oil price, the company maintained its production levels during the quarter, producing an average 5.2 million barrels a day. The first six months of this year, the company said, "was characterised by high fluctuation of oil price and exchange rate, increased transportation tariffs and tax burden, [and] high interest expenses due to [a] change in interest base rate".

America

Central bankers from around the world are telling their American counterparts that they are ready for a U.S. interest rate hike and would prefer that the Federal Reserve make the move without further ado. In private and in public at last week's global central banking conference in Jackson Hole, the message from visiting policymakers was that the Fed has telegraphed an initial monetary tightening and, following a year-long rise in the dollar, financial markets globally are as ready as they can be.The powerful group gathered at the end of a roller-coaster week in markets in which the Dow tanked by 1,000 points on Monday on concerns of a slowdown in China but recovered to trade higher by the end of the week. Remarks by Fed officials that liftoff could come in September were blamed by some for that volatility. But for Agustin Carstens, the top central banker in Mexico, a rate hike by his neighbor sends an encouraging sign of economic health, even if it does force growth-challenged Mexico to also raise rates within days.

Asia

Macau’s economy dipped to its lowest since 2011 as high-end gamblers avoided the world’s largest casino market amid a widening crackdown on graft in China. The city where gambling accounts for four-fifths of economic output saw GDP tumble 26.4 percent in the last quarter, according to government data released Monday. The drop worsened from 24.5 percent in the first quarter. The decline would take Macau’s GDP to about 77.5 billion patacas ($9.7 billion) at constant prices, making it the weakest since early 2011. The only Chinese city where casinos is legal, Macau has seen gross gaming revenue plunge 14 straight months due to the central government’s corruption crackdown that kept high-stakes bettors at bay. China’s slowing economy has further curbed visits by mass market gamblers and tourists. "As long as the downward trend in gaming revenue is not reversed, the decrease in GDP would continue," said Ricardo Siu, an associate professor of business economics at the University of Macau.

St. Simeon’s Day (September 1st) – the beginning of the Christian Year

The Christian feast in honour of St. Simeon the Stylite is also popular in Bulgaria as Simeon the Ploughman and New Agricultural Year, as it marks the beginning of the autumn ploughing and sowing. According to the saint’s passional, the Reverend Simeon the Stylite was born in 357 in Asia Minor. Gentle and humble, he wanted to live completely out of people’s eyes, so he built a stone tower 40 cubits high. He went living in a small cell at the top of it and for that reason was called the Stylite. He died there at the age of 103. As a beginning of the new farming year, St. Simeon’s day is first and foremost agricultural feast. On the eve of the feast, farmers take the sowing seeds to the church for consecration. They put a blade of basil and a red thread with paprika, fruits, walnuts and silver coins strung on it in the seed- corn. The tradition enjoins nothing to be brought out from the house and nothing to be lent on St. Simeon’s day. This prohibition is strictly observed so that “the rich harvest is not leaving the house”. Since the thrashing down and the picking up of the walnuts usually begin on St. Simeon’s day, the feast is also called Simeon the Thrasher.

On that day:  Dantchov's House – Plovdiv