WSE down on negative U.S. sentiment
Stock markets around the world suffered through a tumultuous last week, buffeting the Warsaw Stock Exchange (WSE) through a two-year low and a slight recovery, but still leaving it limping. The WSE has lost about one-third of its value since Jan. 1 but the worst may be over, analysts said.
"The market definitely followed the poor sentiment in the U.S.," said Piotr Kazimierski, co-head of equity sales at SG Securities. "But if you look closely there is a sort of stabilization and it seems that in the short term the market found its bottom Wednesday. Next week should also be stable unless there are some extremely negative developments in the U.S. or Europe."
The market-wide WIG index dwindled 5.57% to 14,442.76, the blue-chip WIG-20 sank 6.25% to 1,377.88 and the TechWIG was beaten down 9.67% to 897.79 over the five-day period ending Thursday. Turnover surged 38% from the previous week to zl. 1.72 billion ($43 million).
The U.S.-based Nasdaq, heavy on tech stocks and often a trendsetter for Warsaw, was off more than 5% for the week while the Dow Jones plummeted below 10,000 for the first time in five months before a weak rally that left it down 5.76% over a five-day span ending Thursday. Concerns over Japan's ailing banking sector, a weakening U.S. economy and corporate profit warnings troubled U.S. markets. European stock indices were down about 3% for the week, while Asia had steadied by Friday's close.
Although some local stabilization is possible, analysts are not predicting a broad recovery in the near term.
"In many cases if you compare target values with current values you can expect around 100% returns on investment," said Pawel Puchalski, senior analyst with Raiffeisen Capital and Investment Polska. "So in theory the best thing to do is to invest all your money." But international investor sentiment coupled with exchange-rate instability and questionable macroeconomic signals in Poland are keeping money out of the WSE, he said, and make a quick turnaround unlikely.
Despite the weak economic signals, Optimus led a swell in trading and shot up 9.84% to zl. 67 per share.
"It went up despite everything," Kazimierski said. He speculated that one of the parties involved in ITI Holdings' recent acquisition of a stake in the computer maker led purchasing.
"The volumes were very heavy, with well over 1 million shares traded," he said. "With obviously no comments from the company or anything, it is very mysterious. It is pretty weird that it's going up despite all the sentiment. Nobody knows why and none of the parties involved in a big transaction wants to give a comment." ITI Holdings bought a controlling stake in Optimus earlier this month.
More typical of tech and telecom stocks was alternative fixed-line telecom provider Netia, which lost 25.22% in a dive to zl. 33.80 per share. Software company Prokom was also sliding on negative sentiment, falling 19.12% to zl. 92.20.
Analysts still see the banking sector as a relatively strong portion of the market. Last week, Pekao, the largest listed bank, reported that its net consolidated profit jumped to zl. 794.87 million ($198.7 million) in 2000 from zl. 171.5 million ($42.9 million) in 1999. Its shares were down on the week, but are still up 23% on the year at zl. 65.90. Bank Slaski has also been strong, especially following Netherlands-based ING Group's announcement two weeks ago that it will take an additional 45% stake in the Polish bank. Slaski's shares were up 15.57% to zl. 263.50. Poland's Securities and Exchange Commission is investigating a potential case of insider trading related to Slaski, but that did not appear to dampen sentiment.
