WIG20 hits a four-year high
High demand came mainly from foreign investors, and the złoty was also very strong. EUR/PLN reached the EUR3.90 mark, its lowest since 2003. The dollar was also very weak and broke the support at zł.2.97.
The extremely high demand on big, liquid stocks listed on the WSE was caused by very good Q4 results posted by Polish companies. Last week, BZ WBK and BPH, two of the five biggest banks, reported excellent results, thus providing support for the whole market. The demand wasn't seen on small and mid caps, but only on very liquid top-index members. Profit taking, which will occur sooner or later, should also hit heavier, larger companies such as TP SA, KGHM or PKN Orlen. Good results in the fourth quarter are not the only reason for the current bull market, but will be considered a good reason to take profits. The outlook for the third and fourth quarters of 2005 is not so bright-GDP growth is expected to slow and the period before elections can increase budget deficits as pro-social parliamentary decisions are expected. But when will the current bull market end? One thing is certain-the bears are just waiting to leave someone with stocks and to start calling him "the long-term investor", i.e. the short term investor who failed. The sector that can now be considered highly overvalued in Warsaw is the banking industry.
Last week's successful IPO of Polmos Lublin, the owner of the Wódka Żołądkowa brand, gave considerable profits for new shareholders. Polmos shares rose 10 percent, after a 96 percent reduction in subscriptions. The prospects for new IPOs this year are very bright, as long as the WIG20 continues its rally.
Adam Łaganowski, Warsaw Investment Group (WGI)
The extremely high demand on big, liquid stocks listed on the WSE was caused by very good Q4 results posted by Polish companies. Last week, BZ WBK and BPH, two of the five biggest banks, reported excellent results, thus providing support for the whole market. The demand wasn't seen on small and mid caps, but only on very liquid top-index members. Profit taking, which will occur sooner or later, should also hit heavier, larger companies such as TP SA, KGHM or PKN Orlen. Good results in the fourth quarter are not the only reason for the current bull market, but will be considered a good reason to take profits. The outlook for the third and fourth quarters of 2005 is not so bright-GDP growth is expected to slow and the period before elections can increase budget deficits as pro-social parliamentary decisions are expected. But when will the current bull market end? One thing is certain-the bears are just waiting to leave someone with stocks and to start calling him "the long-term investor", i.e. the short term investor who failed. The sector that can now be considered highly overvalued in Warsaw is the banking industry.
Last week's successful IPO of Polmos Lublin, the owner of the Wódka Żołądkowa brand, gave considerable profits for new shareholders. Polmos shares rose 10 percent, after a 96 percent reduction in subscriptions. The prospects for new IPOs this year are very bright, as long as the WIG20 continues its rally.
Adam Łaganowski, Warsaw Investment Group (WGI)
