Worldwide gloom drags WSE down
Volumes plunged last week as worrying news soured investor sentiment on the Warsaw Stock Exchange (WSE).
"This week saw the lowest volumes since the Warset system was introduced in November," said Pawel Wojtaszek, analyst at Wood&Co.
Overall, the weekly volume of traded shares reached zl. 1.8 billion ($439 million) last week, a 14.3% drop over the previous week.
Meanwhile, the U.S.' Nasdaq index was down 1.9% on the week finishing at 2,716.78 points last Friday. The all-share WIG-Index dropped 1.5% on week to 17,334.32 points last Friday.
Analysts said the gloom would continue. "The vitality on the Nasdaq would help liven up the market here, but after what Greenspan said, it would be hard to expect that," said Pawel Puchalski, an analyst at Raiffeisen Capital & Investment.
Alan Greenspan, chairman of the U.S. Federal Reserve, said last Thursday that the U.S. economy may have ground to a halt, prompting expectations that hefty interest rate cuts would follow.
Greenspan's statement follows a Monetary Policy Council (RPP) announcement earlier in the week that it had no intention of lowering interest rates soon. The council said it was keeping a close eye on inflation and that until it shows sign of stabilizing, rate cuts are unlikely.
Pawel Borys, an analyst at Erste Securities Polska, said that although the RPP's statement had been expected, it still had a negative effect on the market. He said investors realized last week that they would not see the so-called "January effect" this year, when the market is typically in an upswing.
In addition, lower than expected gross domestic product (GDP) figures, released last Friday, also soured investor interest. GDP in 2000 hit 4.1% rather than the 4.4% analysts were expecting.
"Simply speaking, there wasn't anything to get a return on," Wojtaszek said, adding that last week's stagnation also dragged down blue chips such as Agora and KGHM Polska Miedz.
Even IT giant Prokom wasn't immune to the negative trend, dropping 7.1% to zl. 169 a share last Friday. Overall, the TechWIG plunged 4.6% to 1,332.17 points on the week.
Borys said one of the better performers last week was Bank Pekao, whose stock closed at zl. 66.90 a share, 1.8% lower than the previous Friday's close of zl. 68.10.
Bank Rozwoju Eksportu (BRE), meanwhile, dropped 2.4%, finishing at zl. 140.50 a share last Friday.
BRE was in the news last week after releasing its financial results for the fourth quarter of 2000 and detailing its five-year strategy. The bank said it plans to earmark one-third of its net profit for shareholder dividends during that period. BRE's reported net profit in 2000 reached zl. 355.4 million ($86.7 million), 46.6% lower than the previous year's zl. 665 million ($151.1 million). In 1998 BRE posted a net profit of zl. 205 million ($52.6 million).
According to Borys, the bank's poor showing for 2000 was mainly due to investments in mBank, BRE's new online banking service.
"The disappointed (investors) should look at the bank from a long-term point of view," Borys said. The bank's development trend is positive." In June, BRE plans to launch the first of 50 retail branches for individual clients called Multibank.
