Warsaw shares set new records due to commodities and foreign fund inflows

WARSAW, 07.06.07 (Thomson Financial) - Warsaw shares set new record highs late afternoon as PKN Orlen and KGHM jumped on the back of higher commodity prices, and signs of foreign money pouring into the region kept the bull run on eastern Europe's biggest bourse alive.

At 1605 CET the broad-based WIG index rose 0.7 pct to 67,326.20 pts, while the blue-chip WIG20 increased 1.3 pct to 3.883,01, 3.0 pct away from the psychological barrier of 4,000.

'The market has no intention of falling,' said fund manager at DWS in Warsaw, Tomasz Filipiak. 'Some day the correction will happen, but for the moment investors are frightened to sell, and therefore I expect the 4,000 barrier on WIG20 to be broken next week.'

Poland's top oil refiners PKN and Lotos, as well as copper producer KGHM and gas monopoly PGNiG, led the gainers thanks to rising commodity prices. KGHM and PKN -- Friday's most active stocks -- have risen 4.8 and 2.4 pct respectively.

The news of stronger inflows of foreign money to Polish and other east European equity markets last week also helped keep the market afloat, fund managers said.

'The market's rise is driven by portfolio inflows,' said Mathias Siller, fund manager at Barings Asset Management in London. 'EMEA (Europe, Middle East and Asia) gets a little bit more of them, and rightfully so, as the region has been neglected recently.'

According to reports by Polish brokers, Emerging Europe funds reversed their recent underperformance and posted net inflows of 61 mln usd in the week to July 4. The bulk of new money poured into the Emerging Europe Regional (EER) funds, the largest global investor group committed to Poland.

'Interest rate environment is a risk factor in Poland, but rates are on the rise because of economic growth potential and that, on the other hand, urges earnings estimates to be generally upgraded,' said Siller.

Source: forbes.com