WSE rallies despite budget uncertainty
The Warsaw Stock Exchange (WSE) gained ground last week, dipping slightly on some bad budget and political news but later discarding the information and rebounding despite negative investor sentiment resonating from the United States and other major markets, analysts said.
Weve heard all the bad news, said Rafał Wiatr, head of research with Dom Maklerski Banku Handlowego. The market was relatively strong despite a weakening in the States. But I dont think its an indication were going to be in an upward trend.
The market-wide WIG index rose 1.83% to 12,703.15, the blue chip WIG20 grew 1.7% to 1,130.88 and the TechWIG index shot up 2.53% to 621.64 for the week ending Thursday. Volume was a mild zł. 575.7 million ($137.1 million) for the five days ending Thursday.
International markets finished the week feebly. In the United States, the Dow Jones Industrial Average dipped below 10,000 for the first time since April 9 and the tech-heavy Nasdaq Composite Index, often a bellwether for the WSE, slipped to new short-term lows. So far this year, the Nasdaq is down more than 27%. In other markets last week, European stocks sank despite a central bank interest rate cut and Tokyos Nikkei average closed at a new 17-year low.
The Polish market acted independently of international trends. On the home front, the WSE was jarred slightly by Finance Minister Jarosław Baucs Tuesday dismissal and continuing irresolution of the budget deficit saga. But no additional news piled on to the already bad sentiment and speculation on individual companies seemed to fuel investor maneuvers.
No bad news in the coming days could be viewed as good news for the market, said Ivan Fabijancic, an economist with Erste Bank in Vienna.
Computer firm Softbank was one of the biggest gainers following signals that rival Prokom might engineer a full takeover. For the week, Softbanks share price leaped 12.14% to zł. 23.10 and Prokoms slid 3.32% to zł. 84.50.
Power and telecoms group Elektrim also rallied on reports that it was close to selling its telecommunications assets to France-based Vivendi Universal for $600 million. For the week, Elektrims share price was up 8.29% to zł. 20.90.
Sokołów also drew attention when the European Bank for Reconstruction and Development (EBRD) announced it would buy a e7.5 million stake in the meat producer and processor. The EBRD will acquire its shares from the Swedish Farmers Association (LEA). The bank also plans to loan Sokołów e5 million. The e12.5 million investment will finance new equipment for poultry processing and expansion into export markets, the bank said.
The investment aims to promote restructuring, competent management, sound corporate governance and business conduct not only in meat processing, but in the agribusiness sector generally, said Hans Christian Jacobsen, the EBRDs director of agribusiness. The strong operational restructuring of Sokołów also acts as an example to others in the industry for the need for efficiency, he said in a press release.
The meatpacker became the largest in Poland last year, with about 18% of the market, following a merger with Farm Food, Jarosław and Mięstar plants.
According to a CDM Pekao analysis, as the economy slows the firm faces rising competition from small producers who often operate in the gray area of the economy. The little players, which have about 50% of the countrys market share, can offer products at much lower prices than large, modern plants, such as Sokołóws. But Polands entry into the EU would put these smaller plants outside acceptable rules and regulations and make them obsolete.
In other words, large plants will have 40-45% of the market to take over in the next few years, the report says.
Sokołóws share price moved 12.42% higher to zł. 1.72 per share for the week ending Thursday.
