Weak zloty sparks market; PKN has price
The Warsaw Stock Exchange (WSE) continued modest gains last week on stronger investor interest. The all-share WIG Index closed the week at 15,001.3, up 0.76% on the week, with volume at zl. 308.327 million ($77 million), up 25% from the previous week, but still below average trading levels.
Investor interest last week coincided with a weakened zloty, which made valuations more attractive, analysts said.
"This week, the beginning was rather weak and today (Friday) we are seeing a recovery," said Michal Mierzwa, a financial analyst with Centrum Operacji Kapitalowych Banku Handlowego. The weakened zloty could have encouraged investor activity, he said.
The downturn in the zloty came on the heels of bad macro news, analysts said. The first blow came from the government's economic think tank that forecast a widening in the current account gap and inflation to reach 9% by year's end. The Finance Ministry's present inflation forecast is 8%. The second jolt came when the National Bank of Poland (NBP) clarified its forecast for September's current account deficit of $1 billion. Earlier estimates had placed that figure in the $700 million-$800 million range, which the bank claimed were misinterpretations.
The market is looking at the most recent central bank figure, said Andrzej Nowaczek, Poland equities analyst with Credit Suisse First Boston in London. Murky macro waters will clear this week when the central bank is scheduled to announce actual September data, he said.
On the micro side, Telekomunikacja Polska (TPSA) announced late Thursday that it intended to invest some $500,000 for developing internet and retail services, Mierzwa said. The news fueled a rebound from sagging share prices mid-week. TPSA closed Friday at zl. 21.4, up almost 3% on the news from the previous day.
On Friday, the projected share price for the initial public offering (IPO) of oil firm Polski Koncern Naftowy (PKN) was lowered to zl. 18 to zl. 24, down slightly from original projections ranging zl. 20-zl. 30.
"It's not significant or disappointing," Mierzwa said. "The share price for the IPO is likely to run zl. 21-zl. 23, he said. "That's an attractive level."
In telecom news, Elektrim's battle with Deutsche Telekom for control of mobile telephone operator Polska Telefonia Cyfrowa (Era GSM) reached a deadlock. "There is a tie in the Elektrim-Deutsche Telekom game," said Rafal Gebicki, head analyst with Raiffeisen Capital & Investment Polska.
Deutsche has launched a two-pronged attack to prevent Elektrim from transferring PTC to its telecom holding, Elektrim Telekomunikacja. That's because Deutsche's arch competitor Vivendi plans to take a 30% stake in the firm.
Deutsche is contesting the move both in domestic and international courts, arguing that Elektrim did not have the right to buy shares that gave it a 51% stake in PTC. Deutsche's strategy has also moved out of the courts, recently announcing the takeover of Mobile One. Mobile One holds a 22% stake in PTC, and the acquisition would bring the German operator's stake up to 45%. Another 4% of the company is held by Holdco, which is cooperating with Deutsche, according to analysts.
"If they don't reach an agreement, and I believe they won't, the business may suffer," said Andrzej Kasperek, an analyst who covers Elektrim for COK Banku Handlowego.
The situation is "merely an exchange of arguments between shareholders," said Hans Ehnert, a Deutsche Telekom spokesman.
Malgorzata Halaba and Gregory Keller contributed to this report.
