WSE hit by gloomy first-quarter figures
The Warsaw Stock Exchange (WSE) endured dismal sessions last week following the release of poor quarterly financial results by Polish companies.
An outflow from IT stocks worldwide on the back of the U.S. Cisco's the largest producer of networking equipment first-quarter loss report pulled an already jittery market down further.
Analysts had little to be cheerful about. "Market performance was influenced by the financial reports of Polish companies," said Marcin Materna, an analyst with BIG Bank Gdanski. "Most of them were unsatisfactory, therefore investors shortened their positions and the bourse's main indexes went down."
Others were equally as glum about the market. "The already gloomy picture deteriorated further by falls among domestic IT stocks," said Marek Swieton of ING BSK brokerage house. "Following Cisco's unsatisfactory report, the wave of falls in high-tech stocks hit Europe, including Poland."
The main WIG index, which tracks all stocks traded at the WSE, closed 1.7% down to 14,974.76 points on Thursday. The blue chip WIG20 index fell 2.4% to 1,403.7 points on the week, while the TechWIG index of the SiTech segment of IT companies slid 3.9% to 900.49 points. Trading was light for the week at zl. 1.02 billion ($256 million).
Additionally, the Nasdaq slipped 2.9% to 2,128.86 points on the week.
No sector was left unscathed with the technology and banking sectors bearing the brunt.
Computer-maker Optimus lost 11.9% on the week falling to zl. 50.90 following worse-than-expected annual results. On Wednesday, the company reported a net loss of zl. 40.5 million ($10.1 million) against earlier projections of zl. 7.5 million ($1.9 million). Another IT stalwart, Prokom, lost 2.6% on the week to zl. 112 per share.
The wave of losses also damaged the banking sector's stocks. Following its first-quarter report, Bank Rozwoju Eksportu's (BRE Bank) share price dropped 5.8% to zl. 114.
But amid the gloom, shares in Okocim brewery were buoyed by news that the Okocim's strategic investor, Carlsberg, was cleared by the Polish Securities and Exchange Commission (KPWiG) to buy a majority stake in the company. Carlsberg holds 47.02% of shares in Okocim, but the market expects Carlsberg to call a bid for Okocim shares. In anticipation of the bid, Okocim's stock surged 10.8% to zl. 14.4.
"I think after the first burst of joy, when Okocim's stocks jumped on the back of public call speculations, investors will realize the call can be postponed in time, as Okocim's fundamental figures and market shares are not satisfactory and there are many things that should be analyzed before Carlsberg decides to up its stake," Swieton said.
Also bucking the trend was Pekao bank, whose first-quarter results came as a pleasant surprise for investors. In the first three months of the year, the bank recorded a 53.8% net profit increase to zl. 230.4 million ($58.3 million). On the week, the bank's stocks were up 1.5% to zl. 68 per share.
Analysts said the WSE will move sideways in the forthcoming weeks as the strong zloty and unsatisfactory results of Polish companies discourage foreign investors from opening positions.
Last week, Finance Minister Jaroslaw Bauc told the Polish Press Agency (PAP) that the zloty level is unjustified and should depreciate against the U.S. dollar due to an expected slowed decrease in inflation as well as worsening current account figures.
"The strong zloty coupled with uncertainty about possible interest-rate cuts in May discourage investors from the WSE's stocks," Materna said. "There is little hope that the coming holiday months will reverse the situation, hence any trend reversal will be possible no earlier than after autumn's parliamentary elections." However, Swieton expected the WSE to remain active in June, before its holiday lethargy in the July-August period.
