Cautious investors keep eye on U.S.
While presidential election uncertainty added to downward momentum in U.S. markets last week, the Warsaw Stock Exchange (WSE) followed the same trends, especially among hi-tech issues.
The IT-heavy TechWIG was down 3.2% on the week to 1,394.8 points while the all-share WIG index lost only 0.73%, finishing at 16,423.4 points. Turnover, propelled in part by Telekomunikacja Polska (TPSA) trading, was up 84.26% to zl. 1.168 billion ($253.91 million).
But the confusion that has left the United States without a clear winner in the presidential race has definitely rubbed off on investor confidence in Warsaw, said Flawiusz Pawluk, head of the research department at the BGz brokerage house.
"It looks to me that the Warsaw market will test the bottom," Pawluk said, noting that whether or not the WSE plunges below its Oct. 13 low of 14,929 points next week will determine its future course.
But while stocks across the spectrum were on the slide, banks weren't. Bank Pekao led the group of gainers, up 8.08% to zl. 53.50 per share. Stellar financial results for many banks, along with heavy overselling that recently drove down prices, has attracted investors, Pawluk said.
Bank Slaski (BSK), Bank Rozwoju Eksportu (BRE) and Wielkopolski Bank Kredytowy (WBK) top the bargain hunter's list, he said. WBK was up 7.30% to zl. 24.90 per share while BRE was up 0.88% to zl. 115 and BSK was up 7.77% to zl. 208.
Bank Pekao's public offering, which ended several weeks ago and saw remarkable turnover continue afterward, was responsible for that bank's gains and some of the enthusiasm for the sector, Pawluk said.
Poland's telephone monopolist TPSA, although heavily traded last week as employees sold off shares at the end of two-year lockup, could have had it worse than the 3.20% losses it finished with, analysts said.
First of all, volume was much lower than expected. Of 210 million employee shares, only a fraction hit the markets. "Nobody expected that would happen," said Krzysztof Kaczmarczyk, an analyst with Deutsche Bank Research. "We were expecting large supplies of the shares on the market in the first week."
On Wednesday, during the first few hours in which employees were free to sell, roughly 8 million shares traded. It's possible management campaigns to convince TPSA employees and postal workers to hold their stock were successful. Postal workers were among those who received portions of the 15% of TPSA shares given to employees when its privatization started in 1998.
TPSA's share price has suffered ever since France Telekom was chosen as its strategic privatization partner several months ago. Deutsche Bank downgraded its recommendation from "buy" to "market perform" and set a target price of zl. 35 for the telephone operator. TPSA ended the week at zl. 24.20 per share.
In other news, Poland's largest brewer zywiec, though up 1.36% to zl. 224, announced it will close breweries in Gdansk and Lancut and lay off 300 workers. zywiec, which is owned by Dutch Heineken, currently has eight breweries.
Rising costs of raw materials and an increase in excise taxes are apparently behind the decision. At least "that was the excuse," Kaczmarczyk said.
With the company only operating at 40-50% capacity, it's no wonder zywiec is scaling back, analysts said. "The sector looks pretty bad because of the huge competition," Pawluk said.
