WSE weathers the early storm

Despite a correction of over 20 percent throughout May and June, the first half of 2006 was very successful for market investors, according to a report by ING Investment Management (Polska).

During the first six months of the year, Poland's stock exchange not only avoided a crisis similar to those seen in other regional markets such as Hungary and Turkey, but at 14.5 percent it also achieved one of the highest growth rates in the world. At the same time, the Hungarian BUX noted an increase of only 3.5 percent, while the Czech PX recorded a 5.8-percent drop.

Ewa Radkowska, acting investment director at ING Investment Management, said that the WIG's record value was achieved due to low inflation and a strict interest-rate policy.

"Polish companies achieved very good results and there are still many funds available on the market," believes Radkowska. "However, despite the good index rate, the złoty was affected by a regional currency fluctuation in relation to the US dollar and the euro. Fortunately, it wasn't as significant as the fall of the Hungarian forint or the Turkish lir."

ING forecasts that national pension funds should protect the stock market from significant drops, while low interest rates will increase investors' interest in individual stock-market products. Poland's rate of economic growth will continue to outpace that of the EU, and Polish companies will continue to post impressive results.

However, the report suggests that the situation in foreign markets, such as the US and Japan, could dull investors' interest. Oil prices and higher interest rates in the US and the eurozone were among the most important factors.