WSE surge as market jumps on blue chips
The Warsaw Stock Exchange (WSE) surged last week as investors snapped up blue chip shares while ignoring weak international markets and an unresolved domestic budget crisis.
Telekomunikacja Polska (TPSA) (http://www.tpsa-ir.com/press_release/20010906.htm) spurred the upward trend when the Treasury Ministry concluded a deal to sell France Telecom (FT) (http://www.francetelecom.com) and Poland-based Kulczyk Holding (http://www.kulczykholding.pl) a 12.5% stake in the national telecom operator at zł. 20 per share.
That was the beginning of the move, that was the reason, said Jurek lusarz, a trader with Wood & Co.
The WSEs blue chip WIG20 index shot up 5.3% to 1,190.57, the all-market WIG rose 3.8% to 13,185.85 and the TechWIG gained 4% to 646.66 for the week ending Thursday. Volume was zł. 914 million ($217.7 million).
Outside Poland, the Nasdaq Composite Index suffered losses in seven of eight sessions and by Thursdays close came near its two-and-a-half year low set in early April, while the blue chip Dow Jones Industrial Average slid below 10,000. Japans bourse continued weakly and Europes main indices were also troubled.
But Poland shook the international trend, with heavyweights TPSA, power and telecoms group Elektrim and oil refiner and marketer Polski Koncern Naftowy Orlen leading the way.
TPSAs surge followed Wednesdays announcement that the FT-led consortium upped its share total to 47.5% of the WSEs biggest stock. The group also won an option to buy an additional 2.5% plus one share by the end of 2002 at average market price plus a 25% premium. If the consortium exercises the option it would hold a controlling stake in TPSA.
The consortium purchased a 35% stake for zł. 18.6 billion ($ 4.3 billion) in July 2000 and had an option to buy 10% more earlier this year. FT and Kulczyk declined to execute the zł. 38 per share purchase citing the steep fall of TPSAs stock to less than zł. 13 per share. After the consortium backed away, the Treasury Ministry began negotiations to seal a deal before Sept. 23 the elections.
With TPSAs spike and Elektrims solid performance on the heels of an agreement with Frances Vivendi Universal (see article on page 3), institutional investors picked up their activity on the market.
I think that there is only one thing which is very important, lusarz said of the weeks activity. Pension funds started to buy when they saw the market was getting stronger.
Pension funds typically invest from 20-30% of their assets in equities and control more than 20% of the Polish exchange.
Telecoms group Netia bucked the upward trend following the resignation of the companys chief executive. Netia has been hard pressed, with its stock down by more than 90% in the last year and off 9% for the week, closing at zł. 7.95 per share.
Also on the market, non-life insurer Towarzystwo Ubezpieczeń i Reasekuracji Warta became the first domestic insurer in the Polish market to reach investment grade when Standard & Poors raised its ratings to triple-Bpi from double-Bpi.
Wartas upgrade reflects a significant improvement in its solvency, now regarded as strong, and the continued strengthening of its reserves, said Ashley Gill, an associate in Standard & Poors Financial Services Ratings Group, in a press release. It also factors Wartas pretax earnings, which are good despite having shown some historic volatility.
Warta is Polands second-largest non-life insurer and is majority-owned by Kulczyk Holding. Belgian KBC Insurance bought a 40% stake in the company in 2000.
Warta, a very lightly traded stock, ended the week the way it started, at zł. 115 per share.
On the budget front, the government last week reviewed assumptions for the next years budget but due to pending elections final numbers are unlikely to surface until October. The zł. 3.5 billion ($833 million) from last weeks TPSA deal is about zł. 2 billion ($476 million) less than the treasury originally expected from the sale but helped generate some of the zł. 18 billion ($4.2 billion) in privatization revenue the government calculated for 2001.
