"Stock Watch": Investors bored in holiday run-up

The Warsaw Stock Exchange (WSE) crawled sluggishly through a week marked by a holiday break in trading. The blue chip WIG20 index inched up by 0.5% to 1,339 points, the all-share WIG index closed up 0.5% at 15,055 and the TechWIG index moved 0.5% higher to 590.04 points for the four-day period ending Wednesday. "It was a quiet week because of the Easter holidays," said Rafał Wiatr, chief analyst at CDM Banku Handlowego. Last week disappointed investors who were hoping for a long-expected rebound on the WSE. "(The previous) Friday gave some hopes for significant gains but the Monday session dashed them definitively," said Sebastian Słomka, head of research at Bankowy Dom Maklerski PKO BP. The reasons for the calm reach deeper than the Easter break, analysts said. "Investors don't know which way the market will go," said Tomasz Jerzyk, analyst at Dom Maklerski BZ WBK. "There are a few companies that are close to their maximum levels and a continuation of gains may be expected but there is also a group of weaker companies that have been falling."

The bulls are mainly banks such as BRE Bank, Bank Zachodni WBK, ING Bank Śląski and Bank Pekao, according to Jerzyk. The bears include WSE's two top stocks: the oil concern Polski Koncern Naftowy Orlen (PKN Orlen) and the telecom giant Telekomunikacja Polska (TPSA). The inertia may continue after Easter, as neither the companies nor the macroeconomic and political environment are likely to generate any significant impulses that could push the bourse up or down, analysts said. "This tedious stabilization may continue for some time," Słomka said. "There will rather be no major news or sensational information in the next two weeks, which is another reason to believe that the market will stay stable and discourage investing." While the Warsaw bourse moved against the global trends in January and February, Słomka said that the Polish market is now following the downward pattern that began abroad in March. "The correction in the West will have to last a bit longer," Słomka said. "And only when trends abroad take a more evident direction, Warsaw can experience some gains." Warsaw will stay in the gentle downward trend this week, according to Jerzyk. "I see room for further falls to some 1,250 points on the WIG20," he said. Słomka agreed. "The global correction will be continued in Warsaw as well, but the 1,250-1,300 points level will not be broken," he said.

Investing in Polish papers The paper manufacturer Frantschach Świecie has been the symbol of stability not just last week but since January and analysts expect the stock to range from zł. 25-zł. 30 during the coming months. "The stock is less and less liquid, because financial investors have already accumulated many of its shares," said Andrzej Łucjan, an analyst at Biuro Maklerskie BPH-PBK. "The stock's liquidity has been getting smaller, so the price is becoming stable." Świecie, which traded at zł. 20-zł. 25 until a year ago, decided in March 2001 to pay out an impressive dividend of zł. 8.83 per share. The move was followed by a steep share price slump from zł. 26 to zł. 13 in August last year, when investors began to accumulate the devaluated stock. A several-month-long rebound drove the price up to zł. 30.80 in late January, where the growth potential was exhausted and the stock has since been hovering around zł. 28-zł. 30.80. "Świecie is the institutional investors' favorite stock because it pays out large dividends," Łucjan said. The rights to the company's last dividend were defined on March 13 and investors earned another zł. 1.38 per share. But this time the stock plunged for one day only and returned to the zł. 29 level over two sessions that followed. "Świecie is an interesting stock for very long-term investors and that's why pension funds have invested so much in it," Łucjan said. "The company should continue to generate positive results and pay out dividends in the long run."