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Polish Capital Market Report - 2014

  • September 2014
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 28 pages

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

oPolish 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.

oThe 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.

oAmong 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.

oThese 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

Polish Capital Market Report - 2014
Executive summary5

Market overview6

Poland's economy at a glance6

GDP growth rebounds6

Inflation7

Central bank monetary policy7

Overview of the Warsaw Stock Exchange8

Merger issues8

Main List (Main Market)9

Alternative market - NewConnect10

Bond market - Catalyst11

Treasury BondSpot Poland12

WSE indices13

WIG30 and WIG2013

Mid-cap mWIG40 index14

Small-cap sWIG80 index14

WIG index15

WSE indices - comparison of key ratios15

TBSP.Index15

NewConnect indices16

IPOs16

IPOs in 201317

IPOs in 201418

Significance of the equities market18

Market trends and outlook19

Economic development19

Recent trends and outlook19

Global factors19

Domestic factors21

Non-financial firms seen issuing PLN 50bn in bonds in 201421

Expected new stock exchange listings22

Market Players23

Overview23

Pension funds25

Investment funds26

Foreign investors27

Individual investors28

Major blue chips28







Tables and charts

Table 1 Main economic indicators7

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 ratios15

Table 5 European IPOs by market18

Table 6 Mutual fund asset structure, PLN bn27

Table 7 Top 10 WSE shares by market capitalisation - comparison of current and forecast market multiple28



Figure 1 GDP, quarterly data, y/y growth6

Figure 2 WSE share of number of trades and equity turnover in CEE, Jan-Aug 20148

Figure 3 Main List: market capitalisation and monthly value of session trading in shares, PLN bn10

Figure 4 WSE Main Market P/E and P/B ratios of domestic and foreign companies10

Figure 5 WSE Main Market dividend yield of domestic and foreign companies10

Figure 6 NewConnect: market capitalisation and monthly value of session trading in shares, PLN mn, and number of listed companies11

Figure 7 Catalyst: value of listed non-Treasury bonds (in PLN bn) and number of series11

Figure 8 Comparison of WIG20 and WIG3013

Figure 9 mWIG40 and sWIG80 developments over the last 20 years15

Figure 10 WIG and WIG20 - historic development, end-month values15

Figure 11 NCIndex development over the last 7 years16

igure 12 WIG20 compared to other major global indices, end-month values19

Figure 13 WIG20 compared to regional blue chip indices, end-month values20

Figure 14 MSCI Emerging Markets and MSCI Emerging Markets Europe indices20

Figure 15 Turnover in equities on the Main Market, PLN bn21

Figure 16 Investor categories' shares in equity trading on the WSE Main Market24

Figure 17 Investor categories' shares in equity trading on the NewConnect24

Figure 18 Investor categories' shares in futures trading24

Figure 19 Investor categories' shares in options trading25

Figure 20 Private pension funds' investment portfolio structure26

Figure 21 Investment fund inflows, outflows and net flows27

Figure 22 Net equity purchases by foreigners, PLN bn28

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