WSE down amid political uncertainty
By : Leo Broomfield
The Warsaw Stock Exchange (WSE) ended the week slightly lower on political and macroeconomic worries, although investors were less nervous than the previous week, analysts said. They pointed to end of week sell-offs by the open pension funds, which are preparing to present their quarterly reports. Netia and Orbis were seen as the main victims of this portfolio cleansing, analysts said. Bringing down the key WIG index were the poor performances of two leading blue chips, Polski Koncern Naftowy Orlen (PKN Orlen) and KGHM Polska Mied, both of which are seen as being particularly sensitive to the political uncertainty.
This week saw some kind of a rebound, said Robert Kazimierczak, a securities broker at Wood & Co. in Warsaw. It was time to take a breath. But the market remains a little edgy due to uncertainties on the political front and uncertainties about the state of the global economy and the possibility of war in the Middle East.
The blue chip WIG20 index lost 3.10% on the week to 1,013.6, the all-share WIG was down 2.48% to 11,789.16 and the TechWIG was down 3.28% to 520.94. Volume was low at zł. 638.2 million ($152 million).
Analysts also pointed to the fall in gross domestic product (GDP) growth to just 0.9% year on year in the second quarter. They said GDP should be higher next quarter, but that the fall is an indication of an economy in stagnation, making another revision of next years budget inevitable.
Monday saw the all-share WIG index close at a three-year low, and the key WIG-20 several points below the psychologically crucial 1,000-point barrier. Massive losses by several leading blue chips, including TPSA and PKN Orlen, signaled the withdrawal of foreign investors from the market.
Analysts said the sell-off was further triggered by the uncertain outcome of Sundays general elections, which saw the Democratic Left Alliance (SLD) fall short of an outright parliamentary majority, increasing chances of a minority or coalition government and prolonging uncertainty about the new governments economic policies. Among blue chips, the biggest losers included BIG Bank Gdański, down 13.6% after a massive new share issue was announced, PKN Orlen down 4.4%, TPSA down 3.7% and BPH, down 3.2%.
On Wednesday the WIG-20 rebounded slightly, up 1%. But although the WIG-20 index returned to above 1,000 points, sentiment in Warsaw remained uncertain as Mondays optimism evaporated from European markets where investors waited for U.S. consumer-sentiment data.
Banks were among the most heavily traded stocks on the WSE on Tuesday, with Bank Pekao, BRE, BZ WBK, Handlowy and PBK all making significant gains.
Warsaw ended in positive territory for the second day running on Wednesday, but rises were moderate as investors were reluctant to dig more deeply into their pockets, preferring to wait instead for the formation of a new government in Warsaw, and fresh signals about the U.S.-led war on terrorism. The increases were driven by leading blue chips such as TPSA, Elektrim and PKN Orlen, with trade on TPSA nearly 25% of the markets total turnover for the day.
Investors reaction to the RPPs decision to keep its lending rates unchanged was neutral, as the decision was in line with expectations, even if some hoped the National Bank of Poland would follow in the tracks of the U.S. and EU central banks. Prices were at their lowest level in nearly three years, though given the extremely low visibility, the incentive has proven insufficient.
The weeks biggest disappointment was mobile phone company Netia, whose shares fell by 30%. A further slide was halted, for the moment, after the companys major shareholders, Telia and Warburg Pincus, came out in support of the companys strategy. Netia, Polands second largest telecom company, was traded Thursday at less than zł. 2.8 per share, or 28% less than the day before, and almost 97% below its flotation price. This was Netias second slump this week after Wednesdays reduction of its share price by some 17%. But analysts said support for Netias plans from Telia and Warburg may come to nothing, as neither gave details of the companys controversial rescue strategy. Netias debts are estimated at zł. 3.8 billion ($904 million).
