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Polish Capital Market Report
Emerging Markets Direct, March 2011, Pages: 29
The Polish Capital Market Report contains an analysis and summary of the most significant developments in the Polish capital market. It also includes macroeconomic, equity and debt market forecasts, as well as an overview of new market players and instruments. Written by local professionals, it is a unique market and business intelligence analysis, tailored to save time by providing in-depth information, while helping you to make confident and informed business decisions.
The Warsaw Stock Exchange's (WSE) widest index WIG is likely to grow by 10-15% in 2011, according to widespread belief of brokerage houses and mutual fund specialists. In 2010, the index rose by 18.8% to 47,489.91pts. The blue-chip WIG20 index (which was up by 14.9% last year) is likely to follow suit. Admittedly, indexes and stock prices are in for bigger volatility throughout the year than in 2010.
However, the bourse's outlook will be dimmed by the planned lowering of contributions transferred to open pension funds (OFEs) - analysts deem that the lower assets (new assets are estimated now at PLN 2-3bn instead of PLN 10-11bn) will mean that pension funds would no longer cushion the impact of global sentiments on the Polish equity markets. The zloty is generally expected to appreciate gradually in 2011, though analysts differ as to the scale of the strengthening. They are unanimous, though, in expecting Treasury bonds' yields to keep rising.
Changes to the OFE system - just 11 years after its launch – are explained by the need to find additional budget resources so as to help constrain ballooning public debt. Hence, the government wants to change transfers of actual cash into accounting entries in the Social Security Board's (ZUS) books. For the capital market, it means that the inflow of resources - to be used for equity and debt instrument purchases alike - will be trimmed; however, OFEs' share in the WSE's turnover is not big enough to expect the legal manoeuvres to bring about any landslide changes or to alter market trends.
Indeed, Poland's public finances are the only bleak part of the country's picture: GDP growth remains strong, albeit inflation is likely to continue to accelerate, on the back of global phenomena as well as VAT rate hikes (another source designed to help the state coffers). The finance ministry is adamant that all these efforts would ultimately allow Poland to wind up the excessive deficit procedure in 2012, as required by the European Commission.
Meanwhile, the WSE keeps growing, with more privatization-rooted and private IPOs on the way. Although the blue-chip WIG20 index's enlargement has been put aside for the time being, the bourse is to set up first foreign stocks indexes soon. Also, its bond market catalyst has proven to be a success after slightly more than one year of its existence.
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