WSE continues to fall as investors play wait and see ahead of Fed meeting
Analysts said investors were taking a wait-and-see attitude in advance of the U.S. Federal Reserve meeting scheduled for Aug. 24. They expect investors will also be subdued this week for the same reason.
"People expect an increase in interest rates, which means bad news for equities," said Paweł Zach, an analyst for Citibank (Poland). The market will fluctuate next week a few hundred points around the 16,500 mark, with no clear direction and there will be no foreign investor activity until the results of the meeting are known, he added. "People on the sidelines don't want to sell or buy," he said. "They are waiting for other developed markets' (reactions)."
Lack of interest in the market caused normally popular sectors such as telecoms and banking to perform worse than usual, Zach said. Within the banking sector, Powszechny Bank Kredytowy (PBK) continued to falter after Bank Austria Creditanstalt (BA/CA) announced last week it would merge BA/CA Poland with PBK, killing previous speculation of a sell off. PBK lost 4.5% on the week closing at zł. 96.5 on Friday. The shares had hit zł. 94.5 on Aug. 11 compared to a previous speculation-driven peak of zł. 117 the previous week.
Bank Przemysłowo-Handlowy (BPH) also fell, dropping 7.28% to close Friday at zł. 210 after Bayerische Hypo-Vereinsbank reported that its zł. 230 a share tender was successful. Bayerische's stake in the bank increased to 77% after the tender. Investors had hoped that the tender would fail, forcing Bayerische to offer a higher price.
In the telecom sector, Telekomunikacja Polska (TPSA) fell 3.36% on the week to close at zł. 25.9 on Friday. "It is hard to explain the drop, but there is a lack of foreign investors on the buy side," Zach said.
Media reports that there are now five foreign telecom operators - Deutsche Telekom, Sweden's Telia, US SBC Communications, France Telecom and Japan's NTT - interested in buying a 25-30% stake in TPSA, had no effect on the shares, said Michał Buczyński, an analyst at Centrum Operacji Kapitałowych Banku Handlowego.
"It is because of the situation in the international market," he said. Proof of this was the week's low volume. While this was up slightly on daily turnover of just $20 million-$25 million from the previous week, it still put a damper on prices, said Rafał Gzbicki, an analyst at Raiffeissen Capital & Investment Polska.
In other market news, Deutsche Bank upgraded tire maker Dzbica to a "buy" from a "market perform" rating, saying the stock was undervalued compared to its competition and the market's potential.
Dzbica shares have dropped 6% since the start of the year while the WIG index has jumped 33.6% and Dzbica's main peer Stomil Olsztyn gained 22.9%, Deutsche said in a report dated Aug. 6.
"We have upgraded the recommendation despite a slight revision in the 1999 EPS (earnings per share) forecast, which is due to be a slightly worse-than-expected financial performance in the first half of 1999," the report said. Dzbica, controlled by U.S. Goodyear Tire&Rubber, plans this year to lay off 400 employees, or 8.5% of its workforce, which should cut the firm's costs annually by zł. 14 million ($3.56 million) starting from 2000, Deutsche estimated.
"People expect an increase in interest rates, which means bad news for equities," said Paweł Zach, an analyst for Citibank (Poland). The market will fluctuate next week a few hundred points around the 16,500 mark, with no clear direction and there will be no foreign investor activity until the results of the meeting are known, he added. "People on the sidelines don't want to sell or buy," he said. "They are waiting for other developed markets' (reactions)."
Lack of interest in the market caused normally popular sectors such as telecoms and banking to perform worse than usual, Zach said. Within the banking sector, Powszechny Bank Kredytowy (PBK) continued to falter after Bank Austria Creditanstalt (BA/CA) announced last week it would merge BA/CA Poland with PBK, killing previous speculation of a sell off. PBK lost 4.5% on the week closing at zł. 96.5 on Friday. The shares had hit zł. 94.5 on Aug. 11 compared to a previous speculation-driven peak of zł. 117 the previous week.
Bank Przemysłowo-Handlowy (BPH) also fell, dropping 7.28% to close Friday at zł. 210 after Bayerische Hypo-Vereinsbank reported that its zł. 230 a share tender was successful. Bayerische's stake in the bank increased to 77% after the tender. Investors had hoped that the tender would fail, forcing Bayerische to offer a higher price.
In the telecom sector, Telekomunikacja Polska (TPSA) fell 3.36% on the week to close at zł. 25.9 on Friday. "It is hard to explain the drop, but there is a lack of foreign investors on the buy side," Zach said.
Media reports that there are now five foreign telecom operators - Deutsche Telekom, Sweden's Telia, US SBC Communications, France Telecom and Japan's NTT - interested in buying a 25-30% stake in TPSA, had no effect on the shares, said Michał Buczyński, an analyst at Centrum Operacji Kapitałowych Banku Handlowego.
"It is because of the situation in the international market," he said. Proof of this was the week's low volume. While this was up slightly on daily turnover of just $20 million-$25 million from the previous week, it still put a damper on prices, said Rafał Gzbicki, an analyst at Raiffeissen Capital & Investment Polska.
In other market news, Deutsche Bank upgraded tire maker Dzbica to a "buy" from a "market perform" rating, saying the stock was undervalued compared to its competition and the market's potential.
Dzbica shares have dropped 6% since the start of the year while the WIG index has jumped 33.6% and Dzbica's main peer Stomil Olsztyn gained 22.9%, Deutsche said in a report dated Aug. 6.
"We have upgraded the recommendation despite a slight revision in the 1999 EPS (earnings per share) forecast, which is due to be a slightly worse-than-expected financial performance in the first half of 1999," the report said. Dzbica, controlled by U.S. Goodyear Tire&Rubber, plans this year to lay off 400 employees, or 8.5% of its workforce, which should cut the firm's costs annually by zł. 14 million ($3.56 million) starting from 2000, Deutsche estimated.
