Investors steer clear of WSE
Budgetary warnings from the central bank, dubious politics and a measure of macroeconomic uncertainty kept traders away from the Warsaw Stock Exchange (WSE) during last week's shortened trading week, analysts said.
"Everybody is waiting (but) no one knows what we are waiting for," said Piotr Wozniak, a market analyst at CDM Pekao Securities.
Weekly volume, already down 30% two weeks ago, fell an additional 43.12% to zl. 385.26 million ($87.56 million). The all-share WIG index stayed flat at 19,561.4 points, down 0.58%.
Market activity resided mostly around oil group Polski Koncern Naftowy (PKN) Orlen and Bank Pekao, Poland's largest publicly traded bank, analysts said.
PKN drained the WSE of funds Monday and saw overall trading down 40% as buying focused on the oil company's second public offering of an approximate 30% stake, which began on June 16. "For the time being, obviously there's a lot of interest," said Wood & Co. analyst Krzystof Urban. "But not too much longer because the market expects a discount to the current price."
PKN remained unchanged on the week at zl. 22 per share. Interest will remain strong, Urban said, as PKN is an undervalued company that dominates its sector.
Pekao saw its value drop 7.9% Wednesday when its free float of around 14% nearly doubled as employees began selling off shares awarded them by the state in 1998, said Andrzej Powierza, a Wood & Co. analyst. He said the drop had been expected and is now more enticing to Polish funds and foreign investors looking for a bargain. Pekao was down 9.53% for the week, finishing Wednesday trade at zl. 50.30 per share.
Also affecting the market last week was central bank chief Hanna Gronkiewicz-Waltz's warning to the new minority government. She said that the government had better stick to former Finance Minister Leszek Balcerowicz's outline of cutting the budget deficit to below 2% of gross domestic product (GDP) next year or be ready for further interest rate hikes. The deficit is estimated at 2.7% for 2000 and Solidarity Election Action (AWS) figures show 2.2%, or no reduction.
In other news, stockholder protests over the lack of specifics about a proposed new share issue caused telecom and power conglomerate Elektrim to reduce its new share issue by almost half from 45 million to 25.2 million, local telecom analysts said last week.
Elektrim said earlier this month that it wanted to issue up to 45 million new shares by the end of the year to finance its telecom and internet businesses. Analysts said the vague purpose and lack of plans for spending the proceeds from the new issues forced it to reduce the amount to 25.2 million last week.
"The (company) management should suggest a clear plan of further expansion and acquisitions," said Grzegorz Gonda, a telecoms and IT analyst at Kredyt Bank PBI Inwestycyjny Dom Maklerski.
A company statement issued last week cited no specific reason for Elektrim's decision to issue only up to 25.2 million new shares. The statement said the decision would not "endanger the funding of the company's current business plans." Jacek Dabrowski, Elektrim's director of investor relations, could not be reached for comment.
Elektrim has 83.6 million shares outstanding. Stockholders will vote on the new issue at the company's annual meeting June 30.
Elektrim also announced last week that it would issue $150 million in high-yield bonds by the end of the year to bankroll its fixed-line phone operators and refinance its debt. The company also said it planned to sign a loan for $200 million to refinance its short-term debt.
