(C) 2009 Shares vs. Inflation

Historically the capital market in Bulgaria exceeds the inflation by some three to five percentage points annually. The history, however, never repeats itself and 2008 is an outstanding example of that, with the inflation rate beating the capital market growth (decline) severely.

Taking into account the increased price of the financing and the credits’ abrupt implosion, the inflation in 2009 will decelerate to a single-digit rate. This credit crunch hand-in-hand with the high interest rates will brutally disrupt the businesses which rely heavily on external financing or have planned leveraged expansion.

The winners in 2009 will be those companies that employ highly qualified personnel, offer non-cyclical or counter-cyclical products and services, and most of all have low leverage, or have already contracted preferable interest rates.