Tech surge pushes WSE to all-time high
The Warsaw Stock Exchange (WSE) finally broke through its all-time high last week, driven by another rally in tech stocks.
The all-share WIG index rose 7.38% on the week, closing Friday at 21,224.6 points, its highest point in almost six years and 2.24% higher than the previous record of 20,760 set in March 1994. Volume shot up 22.48% on the week to zl. 1.36 billion ($323.81 million).
"IT companies drove the market but optimism increased and other companies took advantage of the bull market in internet stocks," said Pawel Zach, an analyst at Citibank (Poland).
Analysts said that a crash, such as the one that followed the WSE's all-time high in 1994, was unlikely today given the greater number of institutional investors present.
"In 1994 there was only one," said Michal Mierzwa, an analyst at COK Banku Handlowego. "Now there are pension funds, life insurers and many other companies."
Despite the release of data showing that the current account deficit hit 7.6% of gross domestic product (GDP) in 1999, investors were not put off, Mierzwa said. In contrast, many were encouraged by last week's news that GDP grew 4.1% in 1999, which was considered to be the economy's worst performance for many years. "4.1% is very good in a recession," Mierzwa said.
All prominent tech stocks saw their share prices increase, mainly fueled by domestic investors, Mierzwa said. These included Prokom, up 33.23% on the week to close at zl. 206.5 per share, and ComArch, which rose 36.64% to finish at zl. 248. However, non-IT based companies also experienced share price rises on news that they were moving into internet ventures, he said. Shoe producer Ariel and steel trader Howell also rose 11.74% and 10% respectively to close at zl. 2.57 and zl. 14.85.
Indicative of the market rally on IT stocks was the performance of Szeptel. The private telecom firm soared 47.16% Friday on news that it plans to invest $100 million for building its network, launching local portal sites and expanding its customer base to include all of Poland.
The company currently serves approximately 14,000 telephone subscribers in the former voivodship of Lomza in eastern Poland and is listed on the WSE's parallel market. The stock closed Friday at zl. 25.9, up 47.2% compared with Thursday's close. That figure gives the company a market capitalization of zl. 180 million ($42.9 million).
Szeptel's general manager, Andrzej Binkowski, said the company is also about to announce new strategic partnerships. "We are talking to huge investors that are going to become huge shareholders in our company," he said, declining further comment.
An industry analyst who wished to remain unnamed said these investors most likely would take the form of investment banks and telecom firms. "I think Szeptel wants capital," the analyst said.
However, "for the time being, we are focused on building the market for data transmission." Also, as far as immediate plans are concerned, Binkowski said Szeptel intends to build part of a fiber-optic backbone that will become increasingly instrumental in expanding the country's number of telephone subscribers, which currently stands at about 25% of the population.
Szeptel has also begun providing new residential customers with wireless local telephone service, Binkowski said. He predicted that by June the company would have as many as 23,000 telephone subscribers.
