Poland's stock exchange finally comes of age

The Warsaw Stock Exchange has had its ups and downs, running parallel with the volatility in Poland's political history.

Published on October 30, 2007

The exchange will this year celebrate the 16th anniversary of resumption of trading in the post-communist period from 1991. Indeed, its history dates back to 1817. If it had not been for wars and political upheavals, the Warsaw Stock Exchange would be almost 200 years old.

We were welcomed to the exchange recently by Lidia Adamska, a member of its management board. She was dressed in an impeccable grey suit and occupied a spacious office in the exchange's modern building overlooking Warsaw. Although the Warsaw Stock Exchange is relatively young, it is one of the fastest-growing exchanges in the region and is fast removing the burden of history. Some 320 publicly traded companies are now listed on the stock exchange.

Adamska seemed buoyant about the exchange's spectacular growth of the, particularly now that Poland has become a member of the European Union. Joining the EU in May 2004 was a watershed moment in Poland's history. Now it is a country with an attractive growth story.

Last year the exchange had only 38 new listings, but Adamska expects that number to jump to 60 to 70 this year.

"We're second in Europe as far as initial public offerings are concerned," she said.

The Warsaw Stock Exchange is also expanding rapidly in terms of market capitalisation, from ค150 billion (Bt5.1 trillion) last year to more than ค200 billion this year. The sharp growth of the stock market reflects the high growth of the economy through fresh investment.

"We're a leading exchange of the region, which covers central and eastern Europe, Vienna, Prague and Budapest," Adamska said.

Although the Warsaw Stock Exchange does not have a long history like its Viennese counterpart, it has become a regional leader in terms of size and active trading.

Both the structure and regulatory systems of the Warsaw Stock Exchange are based on the most modern and efficient systems in the world. As a newcomer, it had the advantage of being able to pick the best features of other exchanges to increase the efficiency of securities transactions. Apart from equities, it has expanded to cover derivatives or futures contracts of blue-chip companies on the exchange.

The Warsaw Stock Exchange has also sought to create a balanced mix for investors. Domestic retail investors currently conduct a third of all daily trading, a proportion equal to institutional investors and to international institutional investors. Poland's membership in the EU means that other European investors can invest directly in the Warsaw Stock Exchange without any hindrance or regulatory hassle. It was not until 2004 that the exchange began to see more foreign investors coming into the market to snap up equities.

Of the 320 listed companies, about 16 are foreign owned. The stock exchange is a self-regulating organisation with 42 member brokerage firms, 16 of which are foreign. Since the rules and regulations are derived from the EU, a new securities business can set up in Poland with a simple click of a mouse.

The appearance of foreign brokers and foreign companies on the Warsaw Stock Exchange, and foreign companies doing business throughout Poland, shows that the country is moving forward and opening up its doors to embrace outside capital and know-how. The growth of the stock exchange also reflects the sound growth of the country and the attempt over the past 16 years to create a business-friendly atmosphere.

Adamska said the Warsaw Stock Exchange is viewed as the most trustworthy public institution after the National Bank of Poland.

But the way forward for the Warsaw Stock Exchange, like the Thai exchange, is to woo more quality companies into the market. This will be quite a challenge because the Polish economy only modernised in the early 1990s.

Source: By Thanong Khanthong, nationmultimedia.com