Billions lost, WSE investors "on the brink of panic"

Roman Karkosik, the billionaire investor, lost zł.1.2 billion as shares in more than 50 companies tumbled by more than 10%. "We're on the brink of panic," said Alfred Adamiec, chief economist at Noble Bank. "We have a strong correction. The steeper the losses, the shorter they will last," added Rafal Abratański, Vice-President at DM IDM, a listed brokerage. It was the second sharp fall in small- and mid-cap stocks in a week on the WSE and their indices hit 10 and 8 months' lows, respectively. Why the investor flight from these stocks? "This market segment had been way overvalued. Many people were investing in small-cap funds only because of record profits," said Adamiec. As equity funds bleed money every day, many investors are losing their nerve. Moreover, many small-cap companies reported lower than expected results for the third quarter. October figures already indicated a net outflow of cash from small- and mid-cap funds. More generally, says Jacek Obrocki of broker house BDM, "The risk is high and the bear run on the WSE, coming as it does after a lengthy boom period, will last until the end of the year." Pension funds, which typically pour zł.1 billion of funds into WSE stocks every month, have also grown cautious and many companies are postponing their IPOs until "better days". (Puls Biznesu, p. 1, 4-5; Parkiet, p. 1; Rzeczpospolita, p. B12) R.M.