Techs and telecoms pull down WSE
Tech and telecom stocks continued to drag the Warsaw Stock Exchange (WSE) (http://www.wse.com.pl) through trading's basement last week as unimpressive earnings reports, corporate financial concerns and national economic woes kept investors either pessimistic or on the sidelines.
"Over the next couple of months the overall trend will be down, though in the meantime we may have a correction, maybe even quite a strong correction," said Wlodzimierz Giller, a telecom and IT analyst with Erste Bank.
The WSE's all-share WIG index dropped 5% to 12,553.34, the blue chip WIG20 index lost almost 6% to 1,118.64 and the TechWIG slumped by more than 9% to 612.27 for the week ending Thursday. Volume was light at zl. 750 million ($178 million).
Telekomunikacja Polska (TPSA), the heaviest-traded stock of the week, hit new all-time lows as the company's strategic investor France Telecom (FT) and the government failed to come to terms on a fair price for a stake in Poland's dominant phone carrier. FT and Poland's Kulczyk Holding last year purchased 35% of TPSA from the government at zl. 38 per share and had an option to buy another 10% at zl. 40 per share by July 31. TPSA's stock, however, has plummeted and the France-based telecoms company backed away from the purchase.
A Treasury Ministry press officer said Friday that negotiations between the government and FT are ongoing but that no agreement had been reached and no definite time is set for any announcements regarding the option.
On top of concerns related to the company's future, TPSA's financial results for the first half of the year were underwhelming, Giller said. On July 31, TPSA reported a 4.5% increase in its unconsolidated net profit to zl. 878.5 million ($209 million).
For the week, TPSA's stock slipped almost 13% to zl. 13.15 per share.
Poland's biggest alternative fixed-line telecom company Netia and power-and-telecoms group Elektrim also suffered through the week. Netia's share price was affected by investor concerns that the company will run out of money. For the week, its stock dumped nearly 40% of its value to zl. 7.90 per share, roughly 95% lower than when the stock entered the bourse about one year ago.
Elektrim stumbled because investors remained concerned that the firm would be unable to sign a deal with France's Vivendi Universal to resolve the status of jointly owned mobile phone operator Polska Telefonia Cyfrowa (PTC) and help finance the troubled Polish company.
"Elektrim has not signed a final agreement with Vivendi and the longer investors wait the higher the uncertainty in Elektrim and in the market about the future of the company," Giller said. "For these companies no news is bad news."
Elektrim's share price shed 10.7% to zl. 18.30.
In general, the WSE's blue chips suffered last week with only one WIG20 stock posting an overall gain. Bank Slaski, a subsidiary of Netherlands-based ING Group, this month announced that its unconsolidated net profit for the second quarter grew 71% year on year to zl. 66 million ($15.7 million). For the week, the company's share price squirted up 4.8% to zl. 272.50.
Poles and Lithuanians sign agreement
While the general market was troubled, the WSE last week cast an eye to the future with a cooperative agreement linking it to the National Stock Exchange of Lithuania. While the newly signed accord focuses on sharing information, joint promotion and technical cooperation, WSE President Wieslaw Rozlucki said that it is a step toward joining a wider European network.
"From our point of view there is no point in building the local market without joining a wider European market," he said at a press conference. Rozlucki has also expressed interest in linking up with Euronext, the joint Paris, Brussels and Amsterdam market.
