Stocks plummet to 52-week lows
The Warsaw Stock Exchange (WSE) hit consecutive 52-week lows Wednesday and Thursday when it skidded below its 17,000-point comfort threshold.
"(Last) week was horrible for the investor," said Flawiusz Pawluk, chief of the research department at BGZ Brokerage House.
The all-share WIG index ended Friday down 1.1% for the week at 16,882.6 points. Volume was down 9.8% to zl. 455.26 million ($101 million).
Pawluk believes that since so much of the market is down on technical factors market corrections, investor sentiment, etc. rather than on fundamentals such as financial standing, the outlook isn't all that grim.
"The (possibility) that the market will go down another two, three or 5% is really very low," he said.
Losing heavily on the week was telecom and power conglomerate Elektrim, which saw share prices plunge 10.11% to zl. 40.90.
When share prices dropped below zl. 45, Pawluk said, a psychological barrier was crossed and worried investors sent the stock to its new bottom.
Tele-giant Telekomunikacja Polska (TPSA) was up 0.41% at zl. 24.30 per share, but after hitting its 2000 low two weeks ago, the relief was minimal.
For those who haven't been scared away, Pawluk said this is the time to buy blue chips.
"The market is oversold," he said, while forecasting a 3-5% increase on the WIG for this week. "Big companies like TPSA and Polski Koncern Naftowy (PKN) Orlen are really very cheap." PKN Orlen was down 1.84% to zl. 18 per share.
But not everything slipped. Last week's featured stock, metals producer Kety, finished up 3.92% on the heels of a 7.93% loss two weeks ago. Tire producer Stomil was also up 6.64% to zl. 28.90.
Defying slides in the IT sector were Softbank and Prokom, up 4% and 3.32%, respectively, to finish the week at zl. 70.20 and zl. 202 per share. But in line was ComArch, down 4.44% at zl. 64.50.
The computer systems integrator has been unable to find new customers this year, said Pawel Malyska, an equities analyst with BGZ Brokerage House. Last year, during the first offering of private pension funds in Poland, Malyska said ComArch saw impressive sales among its pension-fund integration systems. Sales were stronger at the end of 1999 as firms installed Y2K-compliant systems.
But now turnover has slowed and some branches of Poland's 26th-largest IT firm appear to be lacking financing. ComArch specializes in providing software and systems integration for the telecoms, banking and industrial sectors of the economy.
In the second quarter of 2000, ComArch saw zl. 45 million ($10 million) in turnover with about zl. 2 million ($444,000) of that showing up in net profit. During the same period of 1999, however, zl. 3 million ($667,000) in profit was recorded for a turnover of zl. 41 million ($9 million).
"The first quarter was even worse," Malyska said.
But gloomy investor sentiment could also be due to the ongoing summer holiday season in which buying and selling stays low, he said, and a number of companies suffer.
The zloty's recent weakening to the dollar has also been discouraging foreign investment in Poland, Malyska said, adding that overall WIG turnover has been unimpressive.
Compounding low activity is also a dismal macroeconomic environment that has investors waiting for Monday's current account (C/A) figures. Analysts are expecting a C/A deficit above July's improved $676 million, but the central bank's forecast of $800 million-$900 million could sour investor appetites even further.
