The Crobex index plunged by 3.82% to 2,049 points while the specialised Crobex10 index went down by 3.8% to 1,102 points around noon on Monday.
The regular turnover exceeded 30 million kuna by that time, which was an exceedingly high volume of trading for the morning.
Anto Augustinovic, a senior capital market analyst of the Erste&Steiermaerkische Bank, said that the beginning of the working day on the Zagreb Stock Exchange had been affected by the developments on global financial markets following the downgrading of the United States' credit rating.
Today's stark reaction of the ZSE to the global developments was also ascribed to the fact that the ZSE was closed on Friday when Croatia celebrated a national holiday and when investors had no opportunity to react to the bad news from the global markets, including a fear about the spillover of a debt crisis to Italy and Spain, according to this analyst.
"The sentiment on the market isn't good, and risks are being heightened, which is why a part of investors have decided to withdraw from the stock exchanges and invest into the Swiss franc and gold," Augustinovic said.
The initial reaction was strong, but in the meantime the losses were reduced.
The analyst predicts the continuation of a volatile trading on the ZSE.
The most traded stock on Monday morning was that of the HT telecom company, which turned over HRK 6.9 million, at HRK 240.35 per share, down five percent. This is the lowest level since 11 September 2009, when it closed the day at the price of HRK 232.7 per share.
Dalekovod, a power transmission equipment producer, made a turnover of HRK 2.9 million on Monday morning, with a price dip of 2.88% to HRK 186.1 per share.
The Atlantic Grupa, a functional food producer, saw a loss of 9.32% in its price this morning.