Mostostal sole blemish on calm market
Despite last week's positive industrial output data and slightly disappointing inflation figures, the Warsaw Stock Exchange (WSE) stayed in its summer doldrums calm and flat.
Analysts said the market's state constitutes more proof that the exchange has grown up and is economically mature enough to divorce itself from every little macroeconomic tremor.
The broad-market WIG index was up 1.98% on the week to 20,047 points. Volume increased by 22.55% to zl. 980.75 million ($228 million), but a significant portion of extra trading revolved around Elektrim.
The power and telecom group saw share prices bump 6% over last week's 7.3% gains after French communications and utilities conglomerate Vivendi was revealed as the mystery buyer of a 4.9% stake in the company. The stake is worth zl. 200.7 million ($46.7 million) and amounts to 4.1 million shares. Elektrim finished the week at zl. 53 per share.
Elektrim trades absorbed 25% of market volume during some periods of the week, said Pawel Puchalski, an analyst with Raiffeisen Capital & Investments Polska. Speculation has it that Vivendi owns substantially more of Elektrim through subsidiaries, he said. Stakes of less than 5% need not be disclosed on the WSE.
Oil giant Polski Koncern Naftowy (PKN) Orlen saw its shares rise 3.85% to zl. 21.60 two weeks after its second public offering ended. A Thursday announcement that the Office for Competition and Consumer Protection (UOKiK) plans to levy a zl. 40 million ($9.3 million) fine against PKN Orlen for monopolistic product-supply practices didn't faze the company's shareholders.
"It's more newsworthy to the press than investors," Puchalski said. If PKN Orlen were to simply increase gas prices by a minimal amount for a few days, "then they've got the zl. 40 million back," he said.
Software firm Softbank saw share prices up 1.94% to zl. 105 after signing a letter of intent to form a joint venture with New York-based Computer Associates (see related story, page 3). Though some are lauding the deal, Puchalski and others aren't. "It's bad news that (Computer Associates) is just a joint venture company," he said, noting that the company's profit had fallen dramatically in the second quarter of this year.
But the disaster story of the week goes to Mostostal Warszawa, one of Poland's leading construction companies. The company announced Friday it had incurred losses of zl. 25 million ($5.8 million) in the first half of 2000. Of the zl. 20 million ($4.6 million) lost in the second quarter, zl. 16 million ($3.7 million) stems from payments owed to Mostostal Warszawa by Intercommerce, a Polish firm that invested in Mostostal Warszawa's Bemowo Trade Center on the outskirts of Warsaw, Puchalski said.
Shareholders had expected earnings of zl. 25 million-zl. 26 million ($5.8 million-
$6 million), he said, after several tax write-offs at the end of last year.
Now, "it seems the company will end the year with a considerable net loss and it's really a disaster for shareholders," Puchalski said. "If I held shares in Mostostal Warszawa, I'd sell them very quickly and then I would never invest in that company again ... It will be extremely difficult to regain the confidence of investors."
Though Mostostal Warszawa shares were down 4% at Friday's fixing and saw a real decrease of more than 2% during the course of trading, they ended the day down 1.97% at zl. 14.90 per share.
Puchalski expects share prices to continue falling during the upcoming trading sessions. The Bemowo Trade Center was completed in December 1999. The zl. 16 million worth of payments in arrears from Intercommerce amount to roughly 20% of the total contract, which is worth zl. 66 million ($15.3 million), Puchalski said.
