Bargain hunters wait for January
The Warsaw Stock Exchange (WSE) hit year lows last week with analysts saying trading levels were so far down that bargain hunters would inevitably push figures back up during the next few months.
The all-share WIG index ended trading at 16,415 points last Friday, about 2.8% down from the previous week and the lowest since the beginning of the year.
The prices were accompanied by low turnover as volume finished at zl. 44.3 million ($98.4 million), 2.4% down from last week.
Brokers and analysts said such low prices would benefit traders looking for bargains by buying undervalued shares. "The prices are very attractive," said Grzegorz Skowronski, head of sales at SG Securities brokerage house.
Market watchers said the WSE has a tendency to hit annual lows around October, as it has done for the past four years, only to recover early in the new year by soaring to annual highs in March.
Last October, for example, the WIG index, hit by fear of a government reshuffling, fell to 14,887 points before recovering by a whopping 46% in March. After the Russian crisis in October 1998, the market plunged to 11,793 points, but rebounded by 19% to 14,015 the following March.
And three years ago, in October 1997, the market went from 17,055 points to 18,575 in March 1998.
Some analysts said a similar scenario is about to play itself out now and early next year: "This is the well-known January effect, when there's new money and new funds coming in," said Benita Mikolajewicz, an investment adviser with ING Barings. "I don't see any reason why this time will be different."
SG's Skowronski agreed, adding that now is the time to buy. "I believe that within six months, interest rates will decrease and the stock market will rebound," he said.
According to one market watcher, current lows on the WSE are mostly caused by investor worries that a weak euro and high interest rates will continue to affect the country's competitiveness. Lower earnings by major companies listed on the WSE are also a factor. "Investors are worried about falling (company) profit," Skowronski said.
He said high interest rates also made investing in fixed-income debt instruments such as T-bills more attractive. "One can get an 18-20% return with a very low risk, and investing in stocks doesn't make sense," he said.
The presidential elections, due on Sunday, were also causing a degree of uncertainty, although most market watchers downplayed the event. "For sure it's not the presidential elections," Skowronski said.
Overall bearish sentiment on the market hit many blue-chip companies. Telekomunikacja Polska (TPSA) traded at zl. 23, down 5% from last Friday. Elektrim was quoted at zl. 39.6 a share, more than 3% less than last week, while Polski Koncern Naftowy Orlen (PKN), the oil giant, traded at zl. 17.70, 2% down on the week.
But Optimus seemed to attract the most attention. The computer maker soared to
zl. 153, up 5% from the previous week. At Thursday's trading session, Optimus' volume reached zl. 52.1 million ($11.8 million), about a third of the trading that day.
Many market analysts said the real interest in Optimus shares was sparked by rumors of a possible takeover by strategic investors. "Everyone knows that BRE Bank is keeping Optimus shares with an eye to selling them to strategic investors," Mikolajewicz said.
But Optimus' share price has been volatile since the beginning of this year.
"Globally there's no sentiment for IT companies," Mikolajewicz said.
