Polish Capital Market Report - 2014

USD $149.00
Polish Capital Market Report - 2014

The current report reviews the recent developments on Poland’s capital market and provides an overall picture of the current trends and the outlook for the country’s equity and debt markets.
Poland’s capital market is the largest and the most developed in the CEE region mainly because of the government’s long-term efforts and consistent policy. In the first eight months of 2014, the Warsaw Stock Exchange (WSE) accounted for 66.5% of the number of equity trades via the electronic order book and for 56.6% of the turnover in the region. Poland’s T-bond market is the deepest state debt market in CEE and the non-Treasury bond market is growing fast. However, the capital market has faced several major challenges this year, the outcome of which will steer its future direction.
Key points
• Polish bond and equity markets suffered from the overall withdrawal of funds from emerging markets due to reduced risk appetite in view of the US QE tapering and the escalation of the Russia/Ukraine conflict. As a neighbour to Ukraine, Poland is one of the most affected countries from the crisis, as its geographical proximity plays a crucial role for investors in case of risk growth in the region. In addition to worsened investor sentiment due to the geopolitical crisis, Poland’s strong trade relations with Moscow cause significant losses to companies due to the sanctions against and from Russia.
• The ECB’s monetary loosening and the highly probable further rate cut by the Polish central bank later this year, is likely to underpin a fall in T-bond yields, which should encourage investing in higher yielding non-Treasury bonds and equities.
• Among important domestic developments, the recent regulatory change that reduced the role of Polish open pension funds on the capital market and the end of the big privatisation deals have contributed to a significant reduction of trading activity and low liquidity on the stock exchange as well as to a considerable slowdown in IPO activity. In addition, Polish corporate earnings have failed to impress despite the significant strengthening of the economy.
• These developments have put pressure on decision-makers to seek ways to support the further development of the WSE and enhance its regional significance. Low liquidity has been defined as the key problem and one of the solutions is set to be a regulatory change, which will stimulate banks to invest in corporate bonds and equities. WSE shelved plans to merge with its biggest regional rival, the Vienna Stock Exchange, saying it will focus on organic growth by developing its international business, increasing attractiveness to market participants, and enhancing shareholder value.

Table of Contents

Executive summary 5
Market overview 6
Poland’s economy at a glance 6
GDP growth rebounds 6
Inflation 7
Central bank monetary policy 7
Overview of the Warsaw Stock Exchange 8
Merger issues 8
Main List (Main Market) 9
Alternative market - NewConnect 10
Bond market - Catalyst 11
Treasury BondSpot Poland 12
WSE indices 13
WIG30 and WIG20 13
Mid-cap mWIG40 index 14
Small-cap sWIG80 index 14
WIG index 15
WSE indices – comparison of key ratios 15
TBSP.Index 15
NewConnect indices 16
IPOs 16
IPOs in 2013 17
IPOs in 2014 18
Significance of the equities market 18
Market trends and outlook 19
Economic development 19
Recent trends and outlook 19
Global factors 19
Domestic factors 21
Non-financial firms seen issuing PLN 50bn in bonds in 2014 21
Expected new stock exchange listings 22
Market Players 23
Overview 23
Pension funds 25
Investment funds 26
Foreign investors 27
Individual investors 28
Major blue chips 28

Tables and charts
Table 1 Main economic indicators 7
Table 2 WIG20 composition (as of Sept 22, 2014) 14
Table 3 WIG30 composition (as of Sept 22, 2014) 14
Table 4 WSE indices – comparison of key ratios 15
Table 5 European IPOs by market 18
Table 6 Mutual fund asset structure, PLN bn 27
Table 7 Top 10 WSE shares by market capitalisation – comparison of current and forecast market multiple 28

Figure 1 GDP, quarterly data, y/y growth 6
Figure 2 WSE share of number of trades and equity turnover in CEE, Jan-Aug 2014 8
Figure 3 Main List: market capitalisation and monthly value of session trading in shares, PLN bn 10
Figure 4 WSE Main Market P/E and P/B ratios of domestic and foreign companies 10
Figure 5 WSE Main Market dividend yield of domestic and foreign companies 10
Figure 6 NewConnect: market capitalisation and monthly value of session trading in shares, PLN mn, and number of listed companies 11
Figure 7 Catalyst: value of listed non-Treasury bonds (in PLN bn) and number of series 11
Figure 8 Comparison of WIG20 and WIG30 13
Figure 9 mWIG40 and sWIG80 developments over the last 20 years 15
Figure 10 WIG and WIG20 – historic development, end-month values 15
Figure 11 NCIndex development over the last 7 years 16
igure 12 WIG20 compared to other major global indices, end-month values 19
Figure 13 WIG20 compared to regional blue chip indices, end-month values 20
Figure 14 MSCI Emerging Markets and MSCI Emerging Markets Europe indices 20
Figure 15 Turnover in equities on the Main Market, PLN bn 21
Figure 16 Investor categories’ shares in equity trading on the WSE Main Market 24
Figure 17 Investor categories’ shares in equity trading on the NewConnect 24
Figure 18 Investor categories’ shares in futures trading 24
Figure 19 Investor categories’ shares in options trading 25
Figure 20 Private pension funds’ investment portfolio structure 26
Figure 21 Investment fund inflows, outflows and net flows 27
Figure 22 Net equity purchases by foreigners, PLN bn 28

Number of pages: 28
Release Date: Tue, 30 Sep 2014