Market dogged by low session turnover
Despite a 48.96% weekly rise in turnover on the Warsaw Stock Exchange (WSE) last week to zl. 634.21 million ($137.87 million), turnovers for some sessions were markedly low.
The all-share WIG index was up 3.74% to 16,550.3 points on the low activity. On Tuesday, for example, only zl. 38 million ($8.26 million) shares were traded.
"It's humiliating for Poland," said Pawel Puchalski, an analyst with Raiffeisen Capital & Investment Polska. "Such turnover could be expected for single company attracting the interest of foreign investors."
Low overall market liquidity creates a conundrum for investors that are considering purchasing major stakes in companies because small turnovers make it difficult to unload shares down the line.
Though only speculation, a related scenario could have come into play last week with Pazur, a trading company that lost 63.64%, going from zl. 24.20 per share to zl. 8.80 per share, Puchalski said. Perhaps an investor holding anywhere from several percent to a large stake in the company got worried and dumped shares, he said. Though recent earnings reports have not been great, the firm has still been recording profit.
Another factor driving down volumes on the exchange is the proliferation of companies delisting from the WSE, Puchalski said. Last week this meant Brok brewery, whose German owner Holsten decided it could compete more strategically on Poland's fierce beer market by divesting itself of the disclosure requirements that come with being listed.
Next in line for delisting are construction firms Exbud and GPRD. Their parent company, Sweden's Skanska, is behind the decision.
"So the total turnover will be lower and lower and that is a great danger for the exchange," Puchalski said.
But one stock traded shares in remarkable quantities and was largely responsible for the week's turnover gains: Bank Pekao. After wrapping up a public offering at the week's start, the bank saw turnover of nearly the zl. 170 million ($39.96 million) Friday. Roughly half of the purchased shares went to small investors at a 10% discount.
"I think some of the large investors used the small investors' accounts to purchase as many shares as possible," Puchalski said, adding it was likely that account managers and brokers had entered into agreements with clients to purchase shares from them.
"It's not illegal," Puchalski said. "In fact, it's legal."
Another bank, Powszechny Bank Kredytowy (PBK), saw its share price up 3.53% to zl. 88 after announcing it had incorporated Bank Austria Creditanstalt Poland, creating Poland's third largest bank in terms of asset value, deposits and credits.
The finalization of talks between Citibank and Bank Handlowy revealed plans for an incorporation of Citibank Poland into Handlowy. A share swap to take place will see 1,350 Handlowy shares traded for one share of Citibank. Handlowy nudged down 2.04% on the week to zl. 48 ($10.43) per share.
Puchalski said the merger was old news and the finalization didn't make much difference.
One of the week's best performers is listed on the TechWIG index, which was itself up 5.37% on the week to 1,442.6 points. Systems integrator ComputerLand traded up 11.79% at zl. 118.50 per share. After somewhat weak showings in 1998 and 1999, the company is now lauded as the IT-sector stock in Poland that analysts believe will continue to improve in terms of revenue, margins and earnings growth, said Grzegorz Latala, an analyst with Raiffeisen Capital & Securities Polska. The stock's target price is around zl. 140, he said.
