WSE shrugs off Wall Street blues
By : Alexander Stocks
The Warsaw Stock Exchange (WSE) rang in the first trading week of the millennium with players reacting to developments on the U.S. NASDAQ, but not as nervously as they might have in the past, analysts said.
The NASDAQ plunged 8% followed by a record 14% surge after Wednesday's decision by the U.S. Federal Reserve to lower interest rates half a percentage point. But the Polish market moved only a few percentage points in either direction, being slightly more affected by the initial downward spiral.
"Unlike the American markets, we didn't feel too significantly the decrease of interest rates in the U.S.," said Pawel Puchalski, an analyst with Raiffeisen Capital & Investment Polska. "As far as pessimism, we are wide open to news from the United States. That's the sad truth."
By Thursday's close, the broad-market WIG index was down 0.19% to 17,875.9 points while the TechWIG was down 1.93% to 1,434.2.
WSE traders, like traders everywhere, will not be planting money in every Internet company to come along in 2001. Banks and companies with liquidity will prove the issues to hold onto, analysts said. If last week was any indication, investors are already taking the prediction to heart.
BRE Bank was up 7.12% to zl. 143 in the first four sessions while Pekao was up 6.39% to zl. 66.60 and Bank Handlowy was up 4.17% to zl. 62.50.
The growing anticipation of near-term interest rate cuts in Poland's 19-23% key rates is sparking growing interest in the country's financial institutions. With lower interest rates, new accounts (especially corporate accounts) should lead to higher profit for banks despite lost interest, analysts said. Puchalski added that lower interest rates spur earnings potential for smaller companies, which also boosts banks' own earnings.
Though the IT sector isn't expected to have a great year after a weak performance in 2000, it is expected to keep pace pretty much with other sectors, said Grzegorz Latala, an analyst at Raiffeisen Capital & Investment Polska. Though a reverse interest in IT issues is expected to persist, corporations will be spending more on IT services in 2001, he said.
"I would rather invest in other sector stocks, the more liquid, larger companies," Latala said.
The more established IT-companies traded over the WSE's TechWIG such as Prokom and Computerland are expected to continue to see earnings growth, analysts said.
One respected computer firm that has been a bit shakier lately is Optimus. News in late 2000 that investor ITI Holdings planned to spin-off Optimus' lucrative onet.pl portal sent investors scrambling to cash in.
The resignation of the company's founder and supervisory board chairman of late, Roman Kluska, had some effect on the company's share price as well. Optimus finished Thursday at zl. 120 per share, down 4.38%.
Also in investors' scopes last week, phone giant Telekomunikacja Polska (TPSA) saw share prices up 4.44% to zl. 28.20 after announcing plans to invest heavily in data transmission and Internet projects. The plans to invest a whopping zl. 27 billion ($6.59 billion) involve too much money to be absorbed by Poland's IT sector, Puchalski said.
KGHM Polska Miedz was mysteriously down for the week 6.95% by Thursday's close although it's believed to be highly undervalued at zl. 24.10 a share.
"I think it's worth accumulating, especially as our target price is (zl.) 40," Puchalski said, explaining that his evaluations put KGHM's core copper business at zl. 22 and its stake in mobile phone operator Polkomtel at zl. 18.
Raiffeisen placed a "buy" recommendation on KGHM and a "neutral" recommendation for TPSA.
