Scenting new blood

After the government's recent announcement of plans to privatize 740 state-owned companies, WSE investors are looking forward to their appearance on the bourse. A number of privatizations are expected by the end of the year.

"Investors are preparing for the debuts of large companies, since their IPOs will definitely attract big capital," said Piotr Kuczyński, chief analyst at advisory Xelion.

Bogusław Taźbirek, the director of the analysis office at DM Polonia Net, noted that the appearance of big stock offerings would increase the overall volume of trade. Moreover, he pointed out, both institutional and private investors are excited by the prospect.

"The former are interested because big firms guarantee huge capitalization and huge liquidity, while the latter see shares in large companies as safer in the longer term," he said.

Kuczyński expects the entry of big firms to draw investors' attention away from smaller companies. This could cause problems for smaller firms, causing them to alter their IPO plans, for example. "These companies will either lower their debut prices to a minimum, or will choose to wait, which I would recommend," he said.

Kuczyński added that the NewConnect alternative market would be affected too.

Taźbirek suggested, however, that the increased volume of trade would benefit smaller companies in the long run. But he stressed that it was difficult to make any predictions since no specific schedule for the state companies' debuts has been drawn up.

Right now trading activity on the bourse is rather low, both experts agreed, and many investors withdrew from smaller companies as early as several months ago. This slump, they noted, stems from the fact that many debuts in 2007 were overpriced.

"Last year investment funds bought shares in a number of companies for relatively high prices; this year the situation is quite the reverse," Taźbirek said.