Market posts low trading, mild losses
A week of low market activity and modest losses on the Warsaw Stock Exchange (WSE) was topped off by four-year low volume Friday.
By Friday's fixing, only zl. 53 million ($11.5 million) worth of stocks were traded, while volume on the all-share WIG index was down 19.86% to zl. 425.75 million ($92 million). The index was down 1.78% to 15,953.1 points. The blue-chip WIG-20 fell 2.95% to end the week at 1,583.6 points.
"It wasn't the best week for long-term shareholders," said Arnold Teterycz, a broker with Citibrokerage.
At the start of last week, the results of the Italian auction for third-generation mobile phone licenses (UMTS) gave wind to positive telecom-sector sentiment Europe-wide, Teterycz said, when one consortium pulled out of the bid and licenses went for much less than originally anticipated.
Perhaps riding the breeze of telecom uptrends was Telekomunikacja Polska (TPSA), Poland's telephone monopoly. TPSA finished the week up 2.08% at zl. 24.50. But that's probably the high point in the near term for TPSA, as anticipation of employee shares flooding the market on Nov. 8 when a mandatory holding period ends will send share prices downward, Teterycz said.
Down last week was Bank Pekao, which fell 2.4% to zl. 48.9 on news that retail investors had subscribed to just 85% of the 13 million shares being offered by the Treasury Ministry as part of its initial public offering (IPO). "The street says that there was no larger interest among players," Teterycz said, mentioning that with no real discount from the treasury-set price of zl. 49, investors didn't see much point.
Back in the telecom corner, Netia closed at zl. 84.5 on Friday and was up 1.08% on the week after the company announced that it was not going to take part in a bid for a UMTS license.
The decision didn't cause any rapid fluctuations in its share price. "Netia is owned by large investors and they knew what was going to happen," said Pawel Puchalski, an analyst at Raiffeisen Capital & Investment Polska.
"It was suspected from the beginning that Netia was not going to bid for a UMTS license," Puchalski said, adding that Netia's previous claims that it would participate in the tender were meant to bolster the company's image.
Unlike Puchalski, Andrzej Kasperek at COK Banku Handlowego admitted to being surprised at the announcement, "although it is quite good news for investors in the medium-term."
Kasperek said other Polish telecoms should use Netia's withdrawal to pressure the Communications Ministry into making the tender more favorable for existing operators. Last week, incumbent GSM operators threatened to boycott the tender in protest against the O650 million price tag per license and the government's decision that incumbent operators must allow new UMTS telecoms access to their roaming networks.
The failure of the UMTS tender would be a disaster for the budget because the government has already included proceeds from the tender in its budget calculations. But analysts said such a scenario is unlikely. "The tender will take place, but this is my personal opinion," Puchalski said.
Kasperek agreed. "I think that in the end somebody will take part in the tender," he said. "Though I wonder how the ministry would react if only one contestant appears.
"From the telecoms' point of view, there would be nothing wrong with postponing the tender, because the existing GSM system is sufficient. But from the budget's point of view, a delay would be a disaster."
