Cautious investors remain on sidelines
Investors shrugged off a domestic interest rate cut and looked to international markets and corporate profit announcements due later this month during light trading on the Warsaw Stock Exchange (WSE) (http://www.wse.com.pl) last week.
"Even the good news, which was the rate cut, failed to spur the market," said Tomasz Bardzilowski, Poland country analyst with Credit Suisse First Boston (Polska). "Whatever happens in the U.S. will have the most impact on the market moving forward."
The U.S.-based Nasdaq index dropped 4% for the five-day period ending Thursday on concerns of a slowing economy and weaker corporate earnings, especially in the tech sector. But the blue chip Dow Jones was up more than 4% and FTSE Eurotop measures also showed improvement on the week. The Warsaw bourse's market-wide WIG index rose 0.42% on the week to 14,621.71, the big-cap WIG20 barely dipped to 1,371.31 and the long-suffering TechWIG fell less than 1% to 870.89. Year to date, the TechWIG has lost 40%.
Five-day turnover was zl. 1.09 billion ($266 million), the second week in a row of light trading as investors stayed on the sidelines.
Barring significant moves on U.S. markets, the WSE is likely to remain subdued as investors watch for new information, especially preliminary earnings announcements due later this month, Bardzilowski said. Until then, they will keep a close eye on developments abroad.
"The U.S. slowdown is the main concern and we are looking for the European Central Bank (ECB) to cut interest rates," Bardzilowski said. "What we need at the moment, apart from further easing in the States, is easing in Europe."
The ECB met Thursday but did not tamper with rates, leaving it out of step with the United States, where the Federal Reserve has trimmed 150 basis points this year, as well as central banks in Japan, Britain and Canada. Poland's Monetary Policy Council (RPP) Wednesday made its second move in two months and has pared 200 basis points so far this year (see story on opposite page). The RPP's move failed to spur investors; the day of the announcement all stocks only gained 0.77% and the next day they dropped 0.71%.
In line with the low turnover, most companies met with only limited interest, though Elektrim remained in traders' sights as that company continued to be caught up in a corporate battle with France's Vivendi Universal and Germany's Deutsche Telekom over control of telecom assets. Three Elektrim supervisory board members quit last week, blocking the dismissal of the company's chief executive. In some of the heaviest trading for the week, shares slipped 1.43% to zl. 27.60 each.
Media group Agora also made headlines as it announced a bid to buy outdoor advertising company Art Marketing Syndicate (AMS) and was shortlisted to buy a strategic stake in state-owned educational book publisher WSiP.
Agora bid publicly for almost 25% AMS at zl. 60 per share, one-third above its market price. But AMS majority owner BB Investment is looking for Poland's largest media company to up the ante.
"This is a further step of Agora to build a media group based on radio, Internet, TV, newspaper and magazines and also based on outdoor advertising," said Lukasz Peresinski, an equity analyst with Fortis Securities Polska. "This is one step to build such a concern and I think it's the right move but I'm afraid that it won't be easy to take over AMS because there is a lack of an agreement between Agora and AMS' major investor, BB Investment. They will have to offer higher than zl. 60."
AMS stock shot up 28.6% the day of the announcement and ended the week ahead 30% at zl. 57.20 per share. Agora skidded 2% to zl. 53.90 per share.
