ITs lead market in turbulent week
The Warsaw Stock Exchange's (WSE) first week of trading this year was particularly turbulent, as the market rallied and then plummeted midweek amid fears of a U.S. interest-rate hike, before posting modest gains by week's end.
The all-share WIG index rose 4.81% on the week, closing at 18,953.5 Friday, while volume shot up 101.67% to zl. 1.13 billion ($269.05 million) after three days of trading the previous week.
"The most interesting thing is that we still have a bull market," said Michal Mierzwa, an analyst at Centrum Operacji Kapitalowych Banku Handlowego.
Warsaw's 4% rise at the start of the week followed major world markets. The spike resulted from renewed investor confidence after fears of the Y2K bug subsided. Furthermore, domestic investors took positions in stocks early on to make significant returns once the foreigners piled back onto the market, said Rafal Gebicki, an analyst at Raiffeisen Capital & Investment Polska. But rumors of the U.S. Federal Reserve raising interest rates spiked a new wave of concern and the Warsaw market followed other exchanges downward on Tuesday and Wednesday, dropping 4.5% and 4.6%, respectively.
"The beginning of the year was wonderful for the WSE," Gebicki said. "But after the rumor on all markets there was a significant decrease, and the WSE showed the same tendency."
The seesaw continued Thursday as signs of recovery emerged and the last two days of trading saw increased investor interest sending share prices upward. Analysts noted domestic institutional investors, in particular pension funds, purchasing stocks, as well as some indications of foreign activity. Investors were also encouraged by news that the National Bank of Poland (NBP) and the government will meet this week to decide on the free float of the zloty, Mierzwa said.
Among the first to profit were tech stocks, amid worldwide enthusiasm for IT companies. All stocks connected with IT experienced substantial gains, with Agora showing the biggest rise, closing at zl. 74.5 per share, up 24.58% on the week. In December, the stock shot up 37.5%, mainly on the strength of an announcement that the company plans to involve itself in internet projects. Optimus shot up 23.09% to zl. 96.5 for the same reasons, Gebicki said.
Similarly, ComputerLand, which is expected to announce its intentions to go into the internet at a press conference this week, rose 12.28%, closing at zl. 75, Mierzwa said. And Softbank, which is due to obtain contracts from various banks and insurance companies to update their IT systems, also climbed 8.7% to zl. 150 a share by week's end, Gebicki said.
Almost all blue-chip stocks also experienced price increases. Telekomunikacja Polska (TPSA) rose 5.17% to close the week at zl. 28.5 on an official announcement by Telecom Italia that it was interested in purchasing a stake in the company after the Treasury Ministry had called a new tender for TPSA. The stock's rise was also influenced by rumors of interest from British Telecom and Deutsche Telekom.
"Many investors see that not only France Telecom is interested," Mierzwa said. "This stock is very, very hot at the moment."
KGHM Polska Miedz also climbed 1.92% to close at zl. 26.5, despite having announced that it was pulling out of copper and silver mining operations in the Democratic Republic of Congo, which had proved a financial disaster. At the same time, the firm said it intended to invest more than $200 million in operations in Zambia. The stock rose to equal its record high of zl. 28 a share on the news. "Investors knew about the troubles in Africa and there is no danger that (they) can influence the price," Mierzwa said. He said both the news of the withdrawal and the new investment were perceived as positive by the market.
Mierzwa expected the market to break through the 19,000-point barrier this week. Investors are optimistic, and further positive macro news on the horizon will strengthen this, he said.
