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What are stocks?
Stocks are types of securities that represent ownership in a company, that is, the owner of the stock becomes the owner of one part of the company. There are two types of stock: common stock and preferred stock. Stocks are very interesting to investors because of their differing returns. If the company’s products or services are in demand and its profits are rising, the shareholder will get a portion of the company's profits which is called a dividend (should the board of directors decide so), or will see his investment increase in value which is called a capital gain. |
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What are bonds?
Bonds are a debt investment, with which the investor lends money to an entity (company or government) that borrows the funds for a defined period of time (normally longer than a year) at a specified interest rate. The advantage to investors over stocks is that bonds are a more secure investment. However, with more security comes a smaller return. This return is called bond yield. Bonds can be issued by a state (government bonds), local government or city (municipal bonds or commonly called munis), or a corporation (corporate bonds). Government bonds are considered the most secure. |
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What is the Central Depository & Clearing Company?
The Central Depository & Clearing Company is the central registry where all information about Croatian securities, their issuers and owners is recorded electronically. Agency members are participants in the capital market such as stock exchanges, securities issuers, brokerage houses, and custodian banks. Every owner of a security has his or her own account at the CDA in which all his or her securities are registered. |
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What is brokerage house?
A brokerage house is a company whose primary business is trading in securities (buying and selling, portfolio management, investment advice, etc.) according to the Securities Market Law. There are about 40 active brokerage houses in Croatia. |
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What is HANFA?
HANFA is an agency created for efficient regulation and supervision of the Croatian securities market, as well as its development. HANFA is responsible directly to parliament. It consists of five board members, of whom one is the president of the board. |
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What is a stock exchange?
A stock exchange is an organized securities market. Its obligation is to ensure that all members are able to place and accept orders for sale or purchase simultaneously, equally and under the same conditions, and that they have the same access to market information on traded securities. Members are considered to be all authorized companies with a license for securities trading. |
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What is a market?
To trade a stock or a bond they must be listed on a stock exchange. For now that is the Zagreb Stock Exchange in Croatia. Zagreb Stock Exchange has two markets: the Regulated Market (with three segmetns: Prime Market, Official Market, Regular Market) and MTP as the Alternative Market. Securities (stocks and bonds) are traded on the Zagreb Stock Exchange via the OMX electronic trading system. The Exchange is open for trading between 10 a.m. and 4. p.m. every day, with the exception of holidays listed on the Exchange's website. |
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How to trade securities?
First, you need to find a brokerage house which will act as your go-between in trading. Once you have a broker, you can give your broker orders (buy/sell), which he then places on the market. You will receive confirmation of the transaction once your order has been executed. |
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How to place an order?
Orders can be placed personally, by phone, fax or electronically.
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Which documents are needed for placing an order?
You need: a form of identification (passport for foreign nationals), a statement from the Central Depository & Clearing Company, the account number to which money can be deposited (in the case of selling), power of attorney notarized by a notary public (if the client wants to sell somebody else’s securities), and confirmation on child guardianship by the Social Welfare Center (in case a parent wants to sell the securities owned by his of her underage child). |
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What is brokerage commission?
Commissions are the fees brokers charge to execute buy and sell orders. Commissions consist of a brokerage house fee, a stock exchange fee. In Croatia, brokerage commissions are set at around 1% of transaction value. Brokerage houses, the stock exchange have their individual price lists. |
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How the orders are executed?
Once the broker receives the client's order, he will place the order on the market according to the conditions previously defined by the client. If there is a matching order on the market that corresponds to the client’s order, it will be executed immediately. In other words, if you want to buy certain stock at a certain price, your order will be executed only if someone else wants to sell this stock at the same price, and vice versa. |
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When to purchase, and when to sell stocks?
The basic rule of investing is to buy stocks that are liquid, that is, ones that are traded more often. There are many factors affecting the price of a stock, meaning that market conditions are not exclusively sufficient in making investment decisions. A company’s financial results (has it made a profit or incurred a loss), the economic environment, the political situation, etc., can also affect price greatly. The basic rule of thumb is to buy stocks when it is expected that their price will rise and sell them when it is expected to fall. However, there are always exceptions, meaning that there is no single pattern to be followed while making investment decisions. |
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Is my money safe on the account of a brokerage house?
Each brokerage house has its own Client account. All withdrawals and all deposits are made through this account. A client’s money is perfectly safe on this account, since the brokerage house is prohibited from using these funds in any way other than to meet obligations toward the client, and since those funds are not taken into account in a possible case of bankruptcy. |
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What is portfolio?
A portfolio represents a group of assets, such as stocks, bonds and cash, managed by a portfolio manager. A portfolio manager manages the portfolio on behalf of the investor. |
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