This year has been a difficult one for stock markets due to the war, rising inflation and interest rates, and worries about the economy. However, the Polish stock market has performed much worse than developed foreign markets. The WIG20 has already lost 35 percent since the beginning of the year, much more than the US S&P 500 (16.8 percent) or the German DAX (19.3 percent).

In August alone, the WIG20 was down 11.2 percent, and the WIG was down 8.8 percent. The WIG20 is trading at its lowest level since April 2020. In other words: almost all of the rally from the big rebound – which followed the stock market tumble caused by the pandemic outbreak – has evaporated from the WSE. At least for the largest and most liquid companies clustered in the WIG20, whose quotations are mainly dictated by capital inflows from foreign investors. The WIG quotation is at its lowest since early June 2020.

The Polish stock market this year is the weakest among the 92 global indices tracked by Bloomberg. This year's returns for the WIG20 and Russia's MOEX index – both of which are quoted in local currencies – are similar, at minus 35 percent. However, if we consider the dollar indexes, then we find that the WIG20 has performed noticeably worse: minus 44.2 percent, compared to minus 19.8 percent for Russia's RTS dollar index. The difference is the result of the strengthening of the dollar against the zloty and the weakening of the U.S. currency against the rouble.

(Business Insider)