Exchange grants investors short reprieve
The Warsaw Stock Exchange (WSE) rode strong global sentiment last week as it recovered to levels last seen in February.
"The global sentiment is much better", said Piotr Kazimierski, co-head of equity sales at SG Securities in Warsaw. "It was actually the catalyst for what is happening."
The market-wide WIG index rose 2.69% to 15,605.69, the blue chip WIG 20 tipped up 3.37% to 1,499.57 and the TechWIG was up more than 4% to 989.42. But the main indices are still down considerably on the year and the overall market is off by 12.6% since Jan. 1. Daily turnover was relatively high last week, peaking Thursday at zl. 397.3 million ($99.3 million).
The recovery mirrored a healthy week in New York, where the Nasdaq has shown steady gains during the past two weeks. The tech-oriented index rode a few positive earnings reports and a surprise interest rate cut in recovering about one-third of its value since bottoming out in early April. But it is still down about 57% from its March 2000 peak.
Opinions were mixed on the sustainability of the WSE's April rally.
"We can see the market going up in the next month or two," Kazimierski said. "It's not a question of local market health, it's a question of global demand and the global environment. It's sustainable provided the global mood continues to be that way."
Others were less sanguine.
"For sure this has been relatively good compared with the previous month or two," said Pawel Puchalski, senior analyst with Raiffeisen Capital and Investment Polska. "I'm afraid that could be the end of this change in mood on the Warsaw Stock Exchange. Why? It seems the correlation between the New York Stock Exchange and the Warsaw Stock Exchange is zero. There is some correlation the next day but later it disappears."
The country's economy and earnings reports from major companies indicate a bad year, he said. "Right now I'm rather pessimistic about the future at least the near future at these levels," he said. "I believe they will fall."
Brokers continue to eye heavily traded Elektrim, which is locked in a battle with French conglomerate Vivendi over the sale of telecom assets to Deutsche Telekom. Vivendi announced on Friday it had made a deal with Elektrim shareholders that will allow it to control the Polish power and telecoms firm. Elektrim's shares were up more than 5% to zl. 33.20 per share.
"This is one stock to watch very closely. It has a huge influence on the WIG and the WIG 20," Puchalski said. "In our opinion it's definitely worth buying at this price level."
Fixed-line telecom operator Netia was also a strong performer on the week, up 16.76% to zl. 40.40. Traders said the issue appeared to be following strong investor sentiment and not any particular company developments.
The WSE will say farewell to one stock and hello to another in the coming weeks.
On Wednesday dairy producer Bakoma decided to delist from the exchange. Bakoma, partly owned by French foods group Danone, said both the stock's low liquidity as well as the high costs of maintaining the company in public trade led to the shareholders' decision.
Meanwhile, Hoga.pl will become the region's second listed Web portal when it offers 2 million shares in its May debut on the WSE, the company announced.
Analysts expect the moves to have relatively little impact on the overall market.
