PKN dominates in week of heavy trading
The market dipped slightly last week, and much trading activity was dominated by oil giant Polski Concern Naftowy's (PKN) first full week of trading.
The all-share WIG index slipped 0.83% on the week to close at 15,922 on Friday. Volume fell 7% from the previous week's six-month high, but remained substantial at zl. 1.03 billion ($264.36 million).
"The volume of shares traded in PKN was huge," said Pawel Zach, an analyst at Citibank (Poland). "It was the only driving factor this week."
PKN, which debuted Nov. 26, is set to be the second-largest stock in terms of market capitalization on the Warsaw Stock Exchange (WSE). Zach said last Monday alone PKN accounted for 42% of main market turnover.
In its first week of trading, the stock climbed 4.5% to close Friday at zl. 23.2 per share. Demand came from big investment banks and small retailers, the latter group exerting greater pressure than expected, said Michal Mierzwa, an analyst at Centrum Operacji Kapitalowych Banku Handlowego. He said he expected the price to hit the zl. 25 mark, although if it pushes further to zl. 28-zl. 29 no one will be surprised. While PKN is so far included only on foreign indexes, the middle of December should see its entrance on the WIG-20, Mierzwa said.
Otherwise, the market remained nervous until the news came on Tuesday afternoon that Deputy Prime Minister and Finance Minister Leszek Balcerowicz, the man on whose shoulders Poland's economic stability rests, would stay in his post. The market rose some 2% after the decision, but the impact of the announcement on equities and the currency market was minimal due to investors having expected him to stay, said Marcin Olecki, a macro analyst at Raiffeisen Capital & Investment Polska.
Other stocks in the news included Elektrim, which fell 6.91% on the week to close at zl. 31 after rumors Vivendi would withdraw from its agreement to become a 30% shareholder in telecom subsidiary Elektrim Telekomunikacja, Mierzwa said.
But, the other firm vying for the partnership is Deutsche Telekom and with negotiations likely to be finalized at the end of this week, either company's decision will be good news for the firm, said Rafal Gebicki, head analyst, also at Raiffeisen. "It can only be very positive for the company," he said. Raiffeisen maintains its "buy" recommendation on Elektrim.
Other stocks in the news included Bank Handlowy, which fell 5.45% on the week to close at zl. 59 as investors speculated on whether its prospective merger with BRE Bank would actually go through or not. The decision is due Thursday and many feel that the fusion is unlikely, analysts said.
Ailing brewer Okocim was also in the doldrums with Erste Bank issuing an "underperform" recommendation on it in a report dated Nov. 23. "Due to serious doubts about the company's future and ability to maintain its market position, we put an 'underperform' recommendation on the stock," the report said. Erste said Okocim's sales dropped 5% in the first three quarters of 1999, and its net profit fell 46% year on year, while the beer market grew 9.5%.
Furthermore, no decisions are through yet on two issues that might revive the company's fortunes, the construction of a new brewery and the development of a reliable distribution network. "Okocim has no clear strategy, and there is a lack of commitment from the main shareholder, Carlsberg," Erste said. Erste's target price for Okocim is zl. 17.5. Okocim closed at zl. 16.90, up 2.42% on the week.
