Stocks report: End of the bull market

The week was the worst one for stockholders this year, and the returns expressed in US dollars were even worse, as the złoty weakened thanks to negative emerging-market sentiment and politial moves to dismiss central-bank chief Leszek Balcerowicz. Among the weakest stocks were banks.

The disappointing results of PKN and KGHM were, for the second week, a good reason to sell. As the companies which were expected to profit the most from rising commodity prices in Q4 2005, these are currently not investors' favorites.

For the future of the bull market in Poland, the most important thing is who is buying stocks right now? The flow of domestic funds into mutual funds is still large and these investors are probably buying some of the stocks from fleeing foreigners.

Retail investors are currently being bombarded by the aggressive advertisements of mutual funds, which speak of historical returns above 25 percent, and the flow of these funds is not a surprise. The two largest funds investing in mid- and small-caps already suspended pay-ins and the absence of fresh capital always ends a rally. The first symptoms of that end are apparent.

Adam Łaganowski,

WGI Dom Maklerski