WSE brought to bear

Warsaw's main WIG20 sunk to a five month low in the slump that hit the global stock market on August 16. By midday Warsaw's blue-chip companies were down 6.2 percent to 3,299.22. The bourse was hard hit by the global market turmoil as investors pulled money from more risky emerging markets amid worries over the US mortgage market. By the closing bell the WIG20 was down 5.4 percent.

The MWIG40 suffered an even worse fate, with a fall of 11 percent that day. It has lost over a quarter of its value from an all-time high of 5,736.31 on June 26. "Mid-caps will be the most vulnerable going forward," said Zbigniew Rebisz, a broker at CA IB. "Pension funds have pushed mid-caps to their highest level in history ... Now it all depends on whether many pension fund customers will make withdrawals," Rebisz added.

The WIG20 index rebounded in afternoon trade on the 17th, along with other European indices, after a surprise discount rate cut in the United States. Warsaw's large-cap index gained 1.7 percent ahead of the closing bell.

The index had lost as much as 16 percent after setting an all-time high in July.

Reassuring investors on 17th, Finance Minister Zyta Gilowska said low inflation, high economic growth and small current account and budget deficits are key factors underpinning the economy.

At the end of trading on the 17th, the złoty was up about 0.8 percent to the dollar and 0.3 percent to the Euro. Central Europe's largest economy has been growing at a rapid pace since Poland joined the European Union three years ago, expanding by a decade-high 7.4 percent in the first quarter. Unemployment has steadily fallen from around 20 percent and is expected to near 10 percent by year-end. (Reuters)  

John Young