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Intellinews - The Warsaw Stock Exchange's IPO
Emerging Markets Direct, Nov 2010, Pages: 22
The IntelliNews Special Reports cover a wide range of topics, related to important current developments in the fields of economy, industry, corporate and politics. They include thorough analytical overview and statistics.
After nearly three years of works on the privatisation of the Warsaw Stock Exchange (WSE) and 193 years since the first Mercantile Exchange was founded in Warsaw, the initial public offering of CEE's single biggest bourse kicked off in October, 2010. Faced with record-high demand, the event is seen as a vehicle helping the WSE in its ambition to strengthen its position as the financial centre of Central & Eastern Europe.
The IPO consisted of 63.8% shares put up for sale by the state treasury, with no accompanying new issue shares, nor shares available for branch investors in the IPO. Encouraged by the successful two multi-billion euro IPOs that preceded the WSE's offering this year (the privatization of power group PGE and insurer PZU), individual investors seemed to be answering to the treasury ministry's call to build citizen-based shareholding - stores of private persons hastened to open their brokerage accounts in the last few months.
Still, it seems that foreign specialists are more optimistic on the WSE's estimated fair value than their Polish peers. Foreign banks' estimations also come close to PLN 2.00bn, while Poland-based valuations start at around PLN 1.34bn. On the basis of the maximum price for retail investors, the treasury's estimation is PLN 1.81bn.
Even though the WSE was ranked first in Europe in respect of the number of IPO conducted in Q3, it still faces fierce competition from the Vienna Stock Exchange. Indeed, the Vienna bourse has already set up links with Budapest, Ljubljana, and Prague, while the WSE - with Romania's Sibex and Ukraine's Innex. Their holding company, CEESEG reported combined market capitalization was EUR 142.4bn as of Sep 30, 2010. The WSE's capitalisation is currently above EUR 202.0bn.
The bourse expects to reach 400 companies listed on its main market by the end of this year, which seems highly likely, and to continue to grow in numbers and prominence afterwards. Macroeconomic fundamentals - with GDP's growth not expected to wane to below 3% in the next few years - bode well for this scenario. It is the equity market sentiment that might derail the plan - after reaching three 2-year highs in the last two months, the WSE is more and more widely expected to be in for a several-month-long downward correction.
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