Market shows signs of spring thaw
Equities slipped at the end of last week but still stood relatively strong compared with European and U.S. markets, according to brokers and analysts.
"The Polish market seems to be outperforming the rest of European and American markets," said Grzegorz Zawada, head of research at Erste Securities Polska. "That may continue next week but I don't expect it to continue in the long term."
For the five-day period ending Thursday, the all-market WIG scampered up 0.81% to 14,560, the large-cap WIG20 dipped 0.4% to 1,372, and the TechWIG, which has suffered heavily this year, tipped down to 878, a 2.1% change. Volume plunged 33% on the week to zl. 1.29 billion ($314 million).
On international markets, the blue chip Dow Jones hit a two-year low Wednesday and by Thursday morning officially entered bear market territory, dropping 20% from its high. The tech-heavy Nasdaq slumped and European indices struggled.
"Generally we were quite strong; it was quite strange for us, taking into account the huge deterioration of European stocks and the Polish economy," said Piotr Dudzinski, a broker with Citibrokerage. Poland's largest institutional investors, pension funds, are expected to receive zl. 600 million ($146.3 million) from the government before the month is through, leading to speculation that some of those funds will be invested in stocks and help support the market, he explained.
"But we still can see a downward tendency," Dudzinski said. "The bottom depends on U.S. bourses. We have to look at the Nasdaq and Dow Jones to see where we will follow," he said.
Corporate speculation also fueled trading last week, with telecom and power group Elektrim especially churning through the rumor mill.
"Elektrim has been dropping for several weeks now due to speculation on its difficult situation and even potential bankruptcy. There have been rumors about management changes they did not happen this week but speculation remains," Zawada said, noting that some resolution could come April 20 when a shareholders meeting is scheduled.
Elektrim, France's Vivendi and Germany's Deutsche Telekom are fighting for control of cell-phone group Polska Telefonia Cyfrowa. Nevertheless, last week Elektrim's share price rose 3.7% to zl. 28.
Copper and telecom giant KGHM Polska Miedz had a rough week, with its stock falling 3.5% to zl. 19.4. "Mostly it is because of concerns about the price of copper plus strong a zloty," Zawada said.
The treasury is looking to mend relations with international investors by bringing Global Depository Receipts (GDR) holders back onto KGHM's supervisory board. Late last year the treasury replaced its five representatives on the nine-member board and booted strategic investor GDR holders. The treasury said an April 19 meeting will formalize the reappointment.
"This is restoring confidence in the government and is overall positive but I don't see KGHM's price picking up," Zawada said.
Dudzinski said investors speculate that the government is looking to float KGHM on the stock market, with an eye to raising revenue from privatizations. This could push the price down and will hold back enthusiasm for the stock, he said.
On the domestic front, investors shrugged off announcements on gross domestic product, exports and unemployment. Analysts noted that, while not wonderful, the statistics were in line with or better than market expectations.
Brokers are also looking to this week's Monetary Policy Council (RPP) meeting in the hope that interest rates will be cut, though most agree that chances are slim until April.
