Politics hit WIG20 and złoty
After reaching a four-year high of 2,131.40 pts, the WIG20 fell 3.5% on Tuesday following the political news and disappointing PKN Orlen Q4 results. The trading volume remained low, and did not show signs of profit taking.
Currency and stock markets reacted very negatively to the political eddy this week. Foreign investors, who were the main source of demand for the złoty and Polish securities, remained relatively patient. The volume reached zł.600 million on Tuesday and fell sharply after WIG20 stopped above 2,000pts. The portfolios of foreign investors remained filled with Polish stocks and debt securities, and market participants may be even more cautious in the future. High popularity among American mutual funds, which invest in Eastern Europe, caused a huge inflow of capital into the Polish market. As the Polish political situation gets more intense, it will increase probability that the last peak of WIG20 was also the end of the bull market. If investors start to believe that there is no more room for growth, the rest of the year will belong to bears, despite good economic prospects.
The biggest WIG20 member and the leader of the recent bull market, oil company PKN Orlen, fell more than 6% last week. The company's Q4 results showed zł.610 million profit, slightly lower than the expected zł.670 million. Overall, 2004 showed a record profit of zł. 2.44 billion, a 171% rise relative to 2003. PKN Orlen, which owns a network of almost 500 gas stations in northern Germany operating under the name of PKN Orlen Deutschland, showed a loss of zł.52 million. Acquired three years ago for E140 million, it is not operating as well as expected and the Polish owner might be forced to sell it, taking a loss on the investment.
Currency and stock markets reacted very negatively to the political eddy this week. Foreign investors, who were the main source of demand for the złoty and Polish securities, remained relatively patient. The volume reached zł.600 million on Tuesday and fell sharply after WIG20 stopped above 2,000pts. The portfolios of foreign investors remained filled with Polish stocks and debt securities, and market participants may be even more cautious in the future. High popularity among American mutual funds, which invest in Eastern Europe, caused a huge inflow of capital into the Polish market. As the Polish political situation gets more intense, it will increase probability that the last peak of WIG20 was also the end of the bull market. If investors start to believe that there is no more room for growth, the rest of the year will belong to bears, despite good economic prospects.
The biggest WIG20 member and the leader of the recent bull market, oil company PKN Orlen, fell more than 6% last week. The company's Q4 results showed zł.610 million profit, slightly lower than the expected zł.670 million. Overall, 2004 showed a record profit of zł. 2.44 billion, a 171% rise relative to 2003. PKN Orlen, which owns a network of almost 500 gas stations in northern Germany operating under the name of PKN Orlen Deutschland, showed a loss of zł.52 million. Acquired three years ago for E140 million, it is not operating as well as expected and the Polish owner might be forced to sell it, taking a loss on the investment.
