IT stocks lead market rebound
The Warsaw Stock Exchange (WSE) bounced back last week as the currency market recovered and investors returned to the information technology (IT) sector after the previous week's poor current account statistics, analysts said.
The all-share WIG index closed Friday at 19,782.3 points, moving up 2.19% on the week. Volume showed its strongest weekly levels in a month, shooting up 145.8% to zl. 832.2 million ($189.14 million) from the previous week's two trading days.
"Almost all IT companies rebounded strongly," said Michal Buczynski, an analyst at Centrum Operacji Kapitalowych Banku Handlowego. "But there was no fundamental reason; the rebound was connected to the strong drop in prices" that occurred in March.
Optimus showed the strongest recovery of all blue chip IT stocks, skyrocketing 29.7% to close at zl. 190 per share. But other WIG-20 tech firms saw steep price inclines with Prokom rising 14.3% to finish at zl. 200 and ComputerLand climbing 9.2% to end the week at zl. 98.3.
While investors have come back to the sector after the profit-taking spree earlier in the year, Buczynski said that Optimus' climb was also attributable to rumors of strategic investors. Last month BRE Bank and private investor Zbigniew Jakubas bought a 28.43% stake and 65.94% of votes in Optimus as a portfolio investment. He said the rumors, following an article published in business daily Puls Biznesu, are that BRE and Jakubas will sell their holdings to one of three partners chosen for the software firm this week.
In banking news, Citigroup confirmed that it received permission from the Banking Supervisory Commission (KNB) to acquire up to 66% of shares in Bank Handlowy. The U.S. financial giant intends to merge its domestic operation, Citibank (Poland), with the country's oldest bank, which will retain the name of Handlowy and remain listed on the WSE. The result will create Poland's third largest bank and a new member of Citigroup.
Citibank did not reveal why it settled for a 66% stake after having originally sought permission to hold 75% in Handlowy. But analysts said that the Securities and Exchange Commission (KPWiG) was worried about Handlowy's position on the WSE after the proposed merger.
"With 75%, there would only be one further approval needed for (Citibank to hold) 100% and then a complete delisting," said Jakub Papierski, an analyst at Deutsche Bank Research.
As well as warding off that threat, Papierski said that after Citibank's purchase of Handlowy shares, there would theoretically still be a 34% freefloat in Handlowy, but other investors would still hold larger stakes, perhaps bringing that figure down to around 25%. Handlowy, with a market capitalization of around $1.4 billion, is one of the WSE's most liquid stocks, and the KPWiG is eager for it to retain that status. "The freefloat issue is the most important," he said. And for Citibank, "with 66%, nothing changes in terms of control." Handlowy showed no change on the week at zl. 67.
In other news, Kredyt Bank pulled out of the race for a 10.3% stake in Powszechny Bank Kredytowy (PBK), leaving Bank Austria Creditanstalt (BA CA) as the sole bidder. BA CA already holds a 43.5% stake in PBK, which it wants to merge with its subsidiary BA CA Poland.
Kredyt Bank was assumed to be acting as a portfolio investor that would sell the stake to BA CA after winning it. However, Papierski said it might also have been involved to help out BA CA in its bid, withdrawing once it got on the short list. "No one can exclude the possibility that its participation was fake," he said. PBK dropped 4.5% last week to zl. 89.8.
