Market climbs toward all-time high
The market closed last week just short of its all-time high of 20,760 to break through the 20,000 mark, fueled by soaring IT stocks and strong gains in blue chips.
The all-share WIG index rose 7.87% on the week, closing at 20,445.7 Friday, while volume shot up 54.26% to zl. 1.74 billion ($243.9 million).
"It's what we had expected and finally it happened," said Arnold Teterycz, a trader at Citibrokerage.
But market watchers were dubious whether the WIG would finally tear through the 20,760-point mark set in March 1994.
"This is a very strong psychological barrier and it won't be easy to break it," Teterycz said. "We were on the same level six years ago and then the market crashed."
There will likely be corrections to the Warsaw Stock Exchange (WSE) next week, and it will be further tested by the expectation that the U.S. Federal Reserve will hike interest rates by 50 basis points next week, Teterycz said. If worldwide markets react negatively to the decision, the WSE will follow suit, but "if there's nothing catastrophic, if there's no panic and no sell-off, there's a chance the bull will come back to Warsaw," and foreign inflows will rush in, he said.
However, the WSE could still continue its upward trend next week without a significant amount of new money hitting the market, said Marcin Sadlej, an analyst at CDM Pekao Securities. Last week, large stock increases were fueled by investors selling off positions and then buying them back at higher prices, he said. The market had been uneasy, with investors looking for corrections, but the growth continued. "This means growth can be sustained" next week, he said.
As in the previous week and last month, tech stocks continued to dominate the market on the heels of the mega merger between America On-Line and Time Warner, market watchers said.
"There was a tremendous outperformance (of the market) by all IT stocks," Sadlej said.
Softbank posted the biggest gain of all such firms last week, rising 24% to close at zl. 186 per share, with its main shareholder pulling out and the company looking for a strategic investor, Sadlej said. Furthermore, Prokom, which rose 14.93% to finish the week at zl. 165.5, is undergoing a similar scenario, with one shareholder decreasing its stake and a relatively big investor in the wings whose identity will be known soon, Teterycz said.
But other IT stocks posted substantial gains purely on the back of worldwide enthusiasm, Sadlej said. These included Agora, Optimus and ComputerLand, which shot up 22.67% to close at zl. 92. The Western IT stocks that CDM Pekao Securities uses for comparison have soared 60% since the beginning of December, and Polish IT stocks have performed likewise, he said.
Telekomunikacja Polska (TPSA) was also in the news, rising 14.04% to close at zl. 32.5. Teterycz said that the price was driven by market enthusiasm behind the second tender for a 25-35% stake in TPSA to a strategic investor. The stock rose 10% Thursday on rumors that Japanese operator NTT would participate in the tender alongside France Telecom and Telecom Italia, although NTT denied this later.
TPSA is now engaging in long overdue promotion of its internet and data transmission activities, in addition to its fixed-line and cellular operations. Its roadshow in London last week also contributed to the price rise, Sadlej said.
Another blue chip, KGHM Polska Miedz, rose 14.72% to finish at zl. 30.4, on the back of a rise in world copper prices and announcement of forming a possible joint venture with the world's largest copper company, Codelco.
