Market heads south as firms fail to impress
The Warsaw Stock Exchange (WSE) followed bad news from U.S. markets and poor economic signals last week as it continued a month-long downward trend. Analysts expect no rebound this week.
"There are no signs of an economic recovery and no expectations of a rate cut," said Artur Szeski, chief analyst at CDM Pekao Securities.
The blue chip WIG20 index fell by 2.9% to 1,338 points, the all-share WIG index closed down 2% at 15,072 and the TechWIG plummeted 8.1% to 605 points for the five-day period ending Thursday.
"There is nothing on the demand side," said Dariusz Górski, an analyst at ING Securities. "Foreign investors aren't buying because international markets are falling and the złoty is appreciating."
Poland's pension funds, which drove the WSE in January, have reached investment limits - shares can account for 40% of their portfolios - and stopped buying stocks, Górski added. Some investors were hoping that pension funds would receive a major chunk of cash transferred from the Social Insurance Administration (ZUS) last week, but the cash flow was relatively small, Szeski said. The money transferred to pension funds in the Feb. 1-20 period totaled zł. 186 million ($44 million), much less than in January, Szeski said.
Bad macroeconomic figures darkened sentiment on the stock exchange, even though the market expected them. Unemployment hit another record high of 18% and industrial output rose by only 1.4% year on year in January, according to the Central Statistical Office (GUS).
Management reshuffles at some blue chip firms combined with weak fourth-quarter results published two weeks ago continued to shape the performance of individual stocks.
"The WIG20 fell so much due to big moves by the largest companies," Szeski said. "The market fell, because PKN Orlen drove it down, while other stocks performed poorly on average due to the market's reaction on results in the fourth quarter of 2001."
The state treasury and its allies changed the president of oil giant Polski Koncern Naftowy Orlen and then voted six new representatives onto the oil company's nine-member supervisory board during last Thursday's general shareholders meeting.
"The WIG20 fell by 40 points, of which 12 were because of PKN Orlen," Górski said.
Most other blue chips slid due to rather poor 2001 results.
Bank Przemysłowo-Handlowy PBK (BPH-PBK), a merged entity of Bank Przemysłowo-Handlowy and Powszechny Bank Kredytowy, suffered a 7.3% loss as the market reacted to its fourth-quarter 2001 results and the management's vague 2002 forecasts, analysts said."BPH-PBK fell more than these poor results would suggest," said Tomasz Rak, banking analyst at Dom Inwestycyjny BRE Banku. "Unless the entire market plunges this week, nothing negative should happen to this stock," he added.
Large reserves set aside in 2001 to cover difficult loans surprised investors most, Szeski said. BPH-PBK's reserves amounted to almost 3% of the entire loan portfolio in 2001, which, according to Rak, is a high ratio.
"But I don't believe that this ratio will worsen in 2002," Rak said. "It should be 1-1.5% this year."
Rak expects the bank to maintain its already good net result at 2001 levels and to improve gross profit to some zł. 470 million ($112 million) this year, as the reserves should be smaller and the cost of laying off 1,400 workers in 2001 will not dent this year's books. But he said that the total costs of the ongoing merger will increase this year from more than E10 million in 2001 to some E30 million this year.
Górski was pessimistic about BPH-PBK's performance for 2002. "The management made very few concrete statements about the forecasts and you can also have the impression that the merger is dragging on and on," he said. "Of the four biggest banks, they have the most serious problems with non-performing loans."
BPH-PBK said that non-performing loans account for 20.2% of its total loan portfolio. "Fifty percent of these loans are actually lost now," Górski said.
By comparison, the non-performing loan ratio is 19.5% at publicly traded peer Bank Zachodni WBK, and 14.5% at Poland's largest listed bank, Bank Pekao,
BPH-PBK had many problematic loans to Daewoo, steel mills and in the sugar industry, Rak said.
"There are no signs of an economic recovery and no expectations of a rate cut," said Artur Szeski, chief analyst at CDM Pekao Securities.
The blue chip WIG20 index fell by 2.9% to 1,338 points, the all-share WIG index closed down 2% at 15,072 and the TechWIG plummeted 8.1% to 605 points for the five-day period ending Thursday.
"There is nothing on the demand side," said Dariusz Górski, an analyst at ING Securities. "Foreign investors aren't buying because international markets are falling and the złoty is appreciating."
Poland's pension funds, which drove the WSE in January, have reached investment limits - shares can account for 40% of their portfolios - and stopped buying stocks, Górski added. Some investors were hoping that pension funds would receive a major chunk of cash transferred from the Social Insurance Administration (ZUS) last week, but the cash flow was relatively small, Szeski said. The money transferred to pension funds in the Feb. 1-20 period totaled zł. 186 million ($44 million), much less than in January, Szeski said.
Bad macroeconomic figures darkened sentiment on the stock exchange, even though the market expected them. Unemployment hit another record high of 18% and industrial output rose by only 1.4% year on year in January, according to the Central Statistical Office (GUS).
Management reshuffles at some blue chip firms combined with weak fourth-quarter results published two weeks ago continued to shape the performance of individual stocks.
"The WIG20 fell so much due to big moves by the largest companies," Szeski said. "The market fell, because PKN Orlen drove it down, while other stocks performed poorly on average due to the market's reaction on results in the fourth quarter of 2001."
The state treasury and its allies changed the president of oil giant Polski Koncern Naftowy Orlen and then voted six new representatives onto the oil company's nine-member supervisory board during last Thursday's general shareholders meeting.
"The WIG20 fell by 40 points, of which 12 were because of PKN Orlen," Górski said.
Most other blue chips slid due to rather poor 2001 results.
Bank Przemysłowo-Handlowy PBK (BPH-PBK), a merged entity of Bank Przemysłowo-Handlowy and Powszechny Bank Kredytowy, suffered a 7.3% loss as the market reacted to its fourth-quarter 2001 results and the management's vague 2002 forecasts, analysts said."BPH-PBK fell more than these poor results would suggest," said Tomasz Rak, banking analyst at Dom Inwestycyjny BRE Banku. "Unless the entire market plunges this week, nothing negative should happen to this stock," he added.
Large reserves set aside in 2001 to cover difficult loans surprised investors most, Szeski said. BPH-PBK's reserves amounted to almost 3% of the entire loan portfolio in 2001, which, according to Rak, is a high ratio.
"But I don't believe that this ratio will worsen in 2002," Rak said. "It should be 1-1.5% this year."
Rak expects the bank to maintain its already good net result at 2001 levels and to improve gross profit to some zł. 470 million ($112 million) this year, as the reserves should be smaller and the cost of laying off 1,400 workers in 2001 will not dent this year's books. But he said that the total costs of the ongoing merger will increase this year from more than E10 million in 2001 to some E30 million this year.
Górski was pessimistic about BPH-PBK's performance for 2002. "The management made very few concrete statements about the forecasts and you can also have the impression that the merger is dragging on and on," he said. "Of the four biggest banks, they have the most serious problems with non-performing loans."
BPH-PBK said that non-performing loans account for 20.2% of its total loan portfolio. "Fifty percent of these loans are actually lost now," Górski said.
By comparison, the non-performing loan ratio is 19.5% at publicly traded peer Bank Zachodni WBK, and 14.5% at Poland's largest listed bank, Bank Pekao,
BPH-PBK had many problematic loans to Daewoo, steel mills and in the sugar industry, Rak said.
