Stocks report: Pre-earnings season drop

Despite a strengthened złoty, The WIG20 lost and broke through the 2,800-point level. The first attempt during the week was unsuccessful, yet the second one brought it below that level. Oil companies Lotos, MOL and Orlen were the weakest, and copper producer KGHM's shares were also down. If foreign investors decide not to further wait for the development of the situation, the falls could be more destructive in the next weeks.

Due to the release their financial report this week, TP is one of the favorite stocks of foreign investors due to its liquidity and size. TP is seeing declining profits and revenues due to increasing competition in the telecommunications sector. TP's stock price has fallen much stronger than the market recently. The revenues of the company are declining steadily by about two percent quarterly, and a figure much lower than zł.3 billion in sales will surely be a negative signal.

The Polish market seems to have been already squeezed to the limits in both fixed income and the stock market. The short term support level for WIG20 is at 2,550 points. It can be reached very quickly as the changing sentiment for stocks and the coming earnings-report season could easily trigger a sell-off.

Adam Łaganowski,

WGI Dom Maklerski