WSE breaks through to another record
The market last week set a new record high for the third time in a month, again driven by domestic and foreign investment in information technology (IT) stocks and further spurred on by January's inflation data, analysts said last week.
The all-share WIG index climbed 2.39%, closing Friday at its new all-time high of 21,753.2 points. But volume fell 9.16% to finish the week at zl. 1.65 billion ($402.4 million). "The IT story continues, it's where people are putting their money right now," said Rafal Wiatr, an analyst with Salomon Smith Barney and Citibrokerage.
As in recent weeks, tech stocks Optimus and Prokom witnessed share price increases. Optimus climbed 4.39% to close at zl. 202 per share, while Prokom inched up 1.23% to finish at zl. 246. However, the WIG's other two blue-chip IT stocks, ComputerLand and Softbank, saw their prices fall on profit-taking, analysts said. Softbank fell 3.27% to finish at zl. 266 while ComputerLand dipped 1.8% to close at zl. 109.
Elektrim and Telekomunikacja Polska (TPSA) also took part in last week's IT rally. Analysts said investors are anticipating both companies' internet projects. "These are highly liquid stocks and they're where foreign investors want to be," Wiatr said. While Elektrim soared 12.28% to close at zl. 64, TPSA set a new all-time high, climbing 3.8% to finish at zl. 35.5.
Also in the news was oil giant Polski Koncern Naftowy (PKN), which inched up 1.25% to close at zl. 24.3 on the back of impressive net profit results for 1999, said Michal Mierzwa, an analyst at COK Banku Handlowego. According to international accounting standards, PKN's net profit climbed 23% last year to zl. 950 million ($243.6 million). "No one expected such huge net profits," he said.
White goods producer Amica also saw large gains this week, rising 21.21% to finish at zl. 48. The firm earned itself a "buy, high risk" rating from Salomon Smith Barney in a report dated Feb. 11, and is one of the only formerly state-run appliance makers to successfully streamline its management structure and become a competitor after communism. Amica is the leading domestic producer of white goods in Poland and controls roughly 35% of the overall market with a 46% chunk of the stove market and 22% of the refrigerator market. Salomon said it believes the company is in serious talks with a strategic investor.
"It looks like it's going to happen to them very likely in the first half of the year, very possibly in the first quarter," Wiatr said. "It would be good for the company in the long run to have a strategic investor who has good distribution channels outside of Poland."
International competitors such as Whirlpool, Electrolux and General Electric would be the most likely partners, Wiatr said, stressing he was only speculating. If Amica teams up with major investors, Salomon is predicting a leap in the firm's stock price to as high as zl. 80-zl. 100. A minority stake in the company is valued at zl. 56, 16.7% above its current price.
"The risk is more than average," Wiatr explained, mentioning that the company was avoided by investors in the past as it had made "unfortunate" management decisions and that it has considerable debt on its balance sheet. "You can't compare a Fiat or Volkswagen to a Mercedes, but you can't say they're bad products," Wiatr said. He added that Amica makes quality, well-designed stoves, refrigerators and built-in appliances and should be able to maintain its place as a major domestic and Central European white goods producer as long as it gains a strategic investor.
