Investment in context
Konrad Kiedrzyński: How do you see Poland against the backdrop of the CEE region you operate in?
Kristel Kivinurm-Priisalm: Some countries in the CEE region are growing fast on a sustainable basis while others are going through huge problems. Still others are in between. Poland lagged behind some other new member states for some time, but now it is on the verge of domestic-demand-driven growth that could last at least four to five years. In fact, Poland at present is reminiscent of what Estonia was in 2003. This growth is stimulated by positive results in the retail and real-estate sectors. Two other countries that are at a similar point in the economic cycle are Bulgaria and Romania. However, we also need to remember about the rate of inflation in Poland, which is likely to edge forward in 2007 and 2008.
What makes Poland attractive in the eyes of a potential investor?
The most interesting thing in the Polish market is its size. There is a great number of listed companies. The range in pricing of listed equities is wide. The Polish banking and construction sectors have been hot favorites of foreign and local investors for a while. I do not think that the underlying growth of these companies necessarily justifies extremely high prices on the stock exchange. Also, the liquidity of the market is much better than in other countries as Poland, unlike other countries in the region, has a significant number of local investors.
Is there anything you think could be improved?
The economy could grow much faster after the government carries out income tax reform. I would welcome the government to further privatize companies and bring them to the bourse, especially now that valuations are on the up-side and can fetch a good price. I would say that the fact that Poland did not privatize most of the [state-owned] companies at the right time is one of the reasons why it is behind other countries in the "new" Europe today.
What is your view of the companies on the Stock Exchange?
I would welcome new IPOs, although ... in most cases, new issues are brought to the market on very high valuation levels. Still, the number of IPOs shows that there is great demand and interest with regard to Polish companies. I expect this trend to continue.
What about the future of the investment market?
That will change with respect to private individuals in that they will have more money to invest. This could make people look at alternative foreign markets as well, creating a trend for diversifying investment portfolios across borders.
