Stocks report: WIG20 beats five year record

The euro was at its  cheapest since March and the WIG20 beat a five-and-a-half year record when it hit 2,354 points. With the exception of the five largest and most liquid companies, the rest of market was rather flat. Mid the and small-caps behaved negatively, confirming that the bull market in Poland is very selective and liquidity is the main factor determining stock popularity.

The widely expected 25bp cut by the Monetary Policy Council (RPP), which left the outlook for further cuts, triggered huge demand on Polish currency and złoty-denominated assets. The WIG20 rose 2.2 percent on the day after the RPP made its decision.

The Midwig, the index determining prices of mid-caps in Poland was constantly under the line, even on the day PKN, Pekao SA and Lotos rose more than five percent. The Advance/Decline ratio was very low, considerably below the 1.00 mark. Gains are very narrow and new records of WIG20 fall short of confirming any extraordinary interest in the Polish market. Very high volumes in this situation can be a sign of nearing the top.

The bull market in Warsaw can be sustained only if smaller stocks begin to rise, oil prices do not threat inflation and the forthcoming elections do not bring any surprises. The next threat are the global markets, which are showing a decreasing sentiment for stocks.

Adam Łaganowski,

Warsaw Investment Group (WGI)