NewConnect, one year on
After a year of trading, NewConnect, the Warsaw Stock Exchange's alternative trading platform, had 61 firms listed, whose total market capitalization amounted to EUR372 (zł.1,243) million. In comparison, London's AIM exchange, the largest alternative market in Europe, had 1,639 listings, whose total capitalization was EUR100 (zł.334) billion, according to data provided by NewConnect.
Turnover in the first year reached zł.982 million, amounting to an average of zł.4 million per trading session. The structure of investors in turnover was quite stable over that period. Individual investors accounted for around 92 percent of turnover in H2 2007, with institutional investors responsible for five percent and foreign investors for three percent. In H1 2008, the percentage of participation by individual investors was unchanged, while institutional investor participation grew by one percent, at the expense of foreign investors.
"[NewConnect is] hard to assess. The situation on the general market has changed quite dramatically [over the last year] and the situation is even harder for a new market such as NewConnect," said Tomasz Jerzyk, an analyst at brokerage BZ WBK and columnist for WBJ.
He added, "From the economic point of view, it's a very important place. Maybe investors are not that happy with the rate of returns, because of the bear market. But it's very important for the development of new firms."
The NewConnect exchange is aimed at young, new firms from "innovative sectors" with a capitalization of up to zł.20 million and the intention of moving to the main stock exchange. The technology sector is currently best represented on the exchange (11 firms), followed by the investment sector (nine firms) and retail (eight firms).
"Many people don't understand the difference between the WSE and NewConnect," Jerzyk said. "When you list on NewConnect, you buy into a dream of developing into a bigger company. It's not that easy, you have to prove something first. You have to show investors that you are able to make the investment a bargain," he concluded.
