Market picks up a bit, but investors await macro data coming this week
But foreign investors and pension funds continued to stay on the sidelines, causing volumes to drop 10.09% with accumulated volume for the week at zl. 480.79 million ($117.84 million). The exchange regained some of the previous few weeks' lost ground, but analysts played down the recovery's long-term significance. "We had a very good week, but so far it's just a technical rebound," said Rafal Lorek, a salesman at SG Bank. "With the WIG's strong decline in recent weeks, the market began to look oversold at around 14,000-14,500, and this technical rebound is the result."
Speculation on external events dominated investors' moves this week, said Piotr Gawrys, head of sales at Raiffeissen Capital and Investment Polska. "The week was dominated in general by investor expectations regarding" central bank meetings in the U.S. and Europe. "Early in the week investors speculated on a positive scenario for interest rates in the United States," which helped to raise the market, Gawrys said. That bet paid off when both the Fed and the European Central Bank refrained from rate increases.
"The market bounced back, but unfortunately it's still not very strong," said Gawrys. Pension funds have been reluctant to get into a declining market and have generally sat on their positions, he added.
Foreign investors also continue to be thin on the ground, Gawrys said. "It's obvious that there is a lack of foreign investors in the market now," evidenced by market turnovers that struggle to reach zl. 100 million ($25 million) per day. "It's quite low, still," he said. "That's all that can be done by domestic funds." This week investors will be awaiting three data releases: September employment figures on Thursday, and the state budget deficit and consumer price index by Friday. Of the three, the inflation data is by far the most important, Lorek said. "Food prices increased strongly in September, and if this increases year-on-year inflation, we could see some speculation on an interest rate rise," Lorek said.
In company news, Elektrim had a difficult week, with the announcement that it is being taken to arbitration court by Deutsche Telekom over its plan to transfer shares of cellular operator Polska Telefonia Cyfrowa (Era GSM) into a new subsidiary Elektrim Telekomunikacja. DT's action is seen by the market as aimed at blocking its French competitor Vivendi, which was to have a large stake in Elektrim Telekomunikacja.
"If Deutsche Telekom continues its actions aimed at not letting Vivendi enter the Polish market, Elektrim may find itself in a very difficult situation," said Andrzej Kasperek, IT analyst at brokerage COK Banku Handlowego. "In the worst-case scenario, Vivendi withdraws from the whole thing, and Elektrim is left alone with no money and no prospects for the future."
Vivendi was to have contributed more than $600 million to the venture, but on the condition that PTC will be included in the new telecoms group. Without that, Vivendi's money becomes a simple loan to Elektrim, resulting in a "potentially huge debt problem" for the company, Kasperek said. "We are seeing now that fewer and fewer banks are willing to loan to Elektrim, and recent loans that have been made are all very short term. Banks see Elektrim's debt as highly risky." Elektrim closed the week at zl. 37.50 per share, down from June's highs of zl. 57.
Speculation on external events dominated investors' moves this week, said Piotr Gawrys, head of sales at Raiffeissen Capital and Investment Polska. "The week was dominated in general by investor expectations regarding" central bank meetings in the U.S. and Europe. "Early in the week investors speculated on a positive scenario for interest rates in the United States," which helped to raise the market, Gawrys said. That bet paid off when both the Fed and the European Central Bank refrained from rate increases.
"The market bounced back, but unfortunately it's still not very strong," said Gawrys. Pension funds have been reluctant to get into a declining market and have generally sat on their positions, he added.
Foreign investors also continue to be thin on the ground, Gawrys said. "It's obvious that there is a lack of foreign investors in the market now," evidenced by market turnovers that struggle to reach zl. 100 million ($25 million) per day. "It's quite low, still," he said. "That's all that can be done by domestic funds." This week investors will be awaiting three data releases: September employment figures on Thursday, and the state budget deficit and consumer price index by Friday. Of the three, the inflation data is by far the most important, Lorek said. "Food prices increased strongly in September, and if this increases year-on-year inflation, we could see some speculation on an interest rate rise," Lorek said.
In company news, Elektrim had a difficult week, with the announcement that it is being taken to arbitration court by Deutsche Telekom over its plan to transfer shares of cellular operator Polska Telefonia Cyfrowa (Era GSM) into a new subsidiary Elektrim Telekomunikacja. DT's action is seen by the market as aimed at blocking its French competitor Vivendi, which was to have a large stake in Elektrim Telekomunikacja.
"If Deutsche Telekom continues its actions aimed at not letting Vivendi enter the Polish market, Elektrim may find itself in a very difficult situation," said Andrzej Kasperek, IT analyst at brokerage COK Banku Handlowego. "In the worst-case scenario, Vivendi withdraws from the whole thing, and Elektrim is left alone with no money and no prospects for the future."
Vivendi was to have contributed more than $600 million to the venture, but on the condition that PTC will be included in the new telecoms group. Without that, Vivendi's money becomes a simple loan to Elektrim, resulting in a "potentially huge debt problem" for the company, Kasperek said. "We are seeing now that fewer and fewer banks are willing to loan to Elektrim, and recent loans that have been made are all very short term. Banks see Elektrim's debt as highly risky." Elektrim closed the week at zl. 37.50 per share, down from June's highs of zl. 57.
