Privatizations fail to rouse market
Weak second-quarter showings in the Polish IT sector were responsible for the skids and tumbles on the Warsaw Stock Exchange's technology index (TWIG) last week, analysts said, perhaps combined with IT pessimism on international markets. Fears of rising interest rates in the United States after Friday's strong economic growth figures also took a toll on world markets, analysts said.
The TWIG was down more than 10% for the week. The broad-market WIG index was down 4.73% to 19,100 points and saw its volume down 31.92% to zl. 667.7 million ($155 million).
"It was definitely one of the worst weeks for IT since the beginning of the year," said Benita Mikolajewicz, an equity analyst with ING Barings Securities.
One IT company that saw share prices plunge was COMARCH, Mikolajewicz said. In addition to poor second-quarter results, she said, the telecom software producer was also likely suffering from Telekomunikacja Polska's (TPSA) privatization or, in other words, a drop-off in orders from one of its main clients. COMARCH's operating level was at zero for the first half of 2000, Mikolajewicz said. Its share prices finished the week down 17.1% to zl. 145.
Computer system firm Optimus lost 11.5% for the week, finishing at zl. 166 per share. Optimus owns 75% in Poland's largest internet portal, onet.pl, and share-price losses were largely a result of the parent company's second-quarter showings, Mikolajewicz said.
Aside from losses spanning tech stocks, market coverage for the week focused mainly on two companies selling off strategic stakes: TPSA and Orbis.
The tele-monopoly surprised some analysts when it fell 9.4% for the week to zl. 30.7 after the treasury sold a long-awaited 35% chunk to France Telecom and Kulczyk Holding. The $4.3 billion sale, at zl. 38 per share, was at a 12% premium to the stock's price.
"The whole market mood is pessimistic, so it just fell with the index," noted Witold Chusc, a macro analyst with CDM Pekao Securities.
But, said an analyst with Erste Securities Polska who asked not to be named, that's the new trend with privatization. Stock prices drop just prior to the signing of privatization agreements when investor interest is low.
The trend seemed to hold true with Orbis. Poland's largest hotel chain saw its stock nose-dive 15.18% to zl. 28.50 after French hotel giant Accor purchased a 35.37% stake for zl. 578.6 million ($134.6 million). The sale brought the treasury zl. 35.5 per share, but Chusc said the market was expecting something closer to zl. 40.
Also, he said, Accor's statement that it doesn't have any intention of buying shares beyond the 35% purchased likely added momentum to the descent.
One of the strongest performing stocks for the week, Mikolajewicz said, was Polski Koncern Naftowy (PKN) Orlen, three weeks after its second public offering ended. But even it was down 2.31% to zl. 21.10 per share. However, the market still believes PKN's shares are undervalued, he said.
As for the subsidiaries of the merging HypoVereinsbank and Bank Austria Bank Przemyslowo-Handlowy and Powszechny Bank Kredytowy (see related story, page 1) both finished the week up slightly, 0.24% and 1.54%, respectively, at zl. 211.50 for the former and zl. 99 for the latter.
In news that could affect future trading, Parliament voted through a new commercial code Wednesday. The law will regulate provisions governing acquisitions and mergers, Chusc said, and will liquidate preferred stock and accompanying voting rights from Jan. 1, 2001, although not retroactively.
