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

Look after the zlotys

The Polish market is one of the strongest in eastern Europe – and it might just have got better

Antony Tilney’s property portfolio reads like a Ryanair departure board: Katowice, Cracow, Brno – name any of those eastern European cities that few of us can pronounce properly, let alone have ever visited, and the former IT consultant has either already bought property there or considered doing so.

Since May 2004, when he acquired his first flat in Prague, Tilney, 38, from Farnham, Surrey, has snapped up no fewer than 32 investment flats in the new European Union member states. The properties, from Latvia in the north to Cyprus in the south, cost him a total £2.7m (of which he has £2m worth of mortgages).

“I’ve got 10 in the Czech Republic, 10 in Poland, two each in Slovakia and Latvia, three in Romania and five in Cyprus,” he says, pausing as he struggles to remember the location of one of his more esoteric purchases – a glance at his spreadsheet reveals it to be Swinoujscie, a Polish port town near the German border. “If I sold them now, I would get about £3.3m. But they’re my pension. I’m hoping that in 10 or 20 years’ time, they will have tripled in value.”

Tilney, who gave up his job to concentrate on his portfolio, bought his most recent property in Katowice, in southern Poland, in June, but is not planning further large-scale acquisitions, as he is at the limit of what he can manage on his own. “I’m not thinking of buying another 10 any time soon, but I will probably pick up the odd one here or there,” he says. Taking advantage of the knowledge he has built up, he is offering an advice service to other would-be investors. His tips: parts of Poland, the Czech Republic and Romania.

Susan Challenger, 35, a change-management consultant from St Albans, Hertfordshire, is following in Tilney’s footsteps. Until earlier this year, her only link with eastern Europe was with Polish tenants in the house she owns in north Wales. This summer, after extensive research, she decided to buy two investment properties, one also in Katowice, for about £60,000 and another, in Gliwice, an even more obscure town in Silesia, for £90,000. Both properties were off-plan and will be completed next year. “I appreciate it’s a high-risk investment, but even if it goes wrong, it is not going to bankrupt me,” says Challenger.

Poland has had one of the best-performing economies – and property markets – of all the former communist countries in recent years, despite the often controversial policies pursued by its ruling twins – Jaroslaw Kaczynski, the prime minister, and his brother Lech, the president. The defeat of the brothers’ right-wing Law and Justice party in last Sunday’s election by the more free-market, pro-business Civic Platform party, looks set to give the economy a further boost. Donald Tusk, expected to the country’s new leader, has said his priorities are cutting bureaucracy, limiting the role of officials over state-controlled firms and introducing a new flat rate of income tax – which should make the country more attractive to property investors.

Simon Tweddle, chief analyst for Property Secrets, a Crewe-based company that specialises in sourcing new-build properties in the region, believes the market in Poland will continue to grow. However, the best prospects are not in Warsaw, the capital, where prices rose 33% last year, or Cracow, where they were up 45%, or Wroclaw, where they surged 55%. Rather, they are in obscure provincial places that have hitherto featured on the radar of only the most sophisticated investors.

“Warsaw could rise between 5% and 10% this year, but Cracow and Wroclaw are both looking overpriced,” says Tweddle. “Bydgoszcz, Szczecin, Bialystok, Lublin and Rzeszow are the kind of places that have the most potential for short-term growth.

“But there is always more risk, too. If you want to rent out somewhere in Warsaw, there will be a whole bunch of different management companies. I’m not sure how easy it would be to find someone in Rzeszow, for example, who is reliable and speaks English.”

But with tens of thousands of Poles seeking their fortunes in Britain and elsewhere, will there be anyone left to rent or ultimately buy all these properties from foreign investors when they sell? “The overall population may be going down, but there is a huge movement from the countryside to the towns,” says Tweddle. The property market is also being driven up by those same expatriate Poles investing some of their earnings back home.

Despite signs of a slowdown in property markets across the world, especially under the impact of the credit crunch caused by this summer’s crisis in the financial markets, the trend is upward in most of the region, according to 2008 forecasts by Property Secrets (see table). Prices in Slovakia and Slovenia, for example, should rise by 15%, and in Sofia and other Bulgarian cities by at least 10%, it predicts. Some of the strongest rises look likely in the Czech Republic, with prices in Prague up a predicted 25% and in Brno, the second city, by 30%. Romania looks strong too, with rises of 30% in Bucharest, the capital, and 20% in the port city of Constanta. “Prague is especially good,” Tweddle says. “That’s where I’d put my money.”

There are signs of trouble elsewhere, though, especially in the three Baltic states. Property Secrets predicts prices in Estonia and Lithuania will both rise by a modest 5% next year, while those in Latvia will not grow at all. This may be optimistic: other recent reports suggested prices in Estonia and Latvia have already fallen back by 8%-10% over the last few months.

Source: By Antony Tilney,

Sunflower oil producer to list in Warsaw

Kernel Group of the Ukraine, the world's fifth largest sunflower seed crusher, hopes to raise up to $200m through an initial public offering on the Warsaw Stock Exchange in early November.

Kernel, controlled by 33-year old Ukrainian lawmaker Andrey Verevskiy, has in recent years established itself as a competitor for world giants such as US-based Cargill and Bunge, both of which have large operations in Ukraine, home to the world's second largest sunflower crops after Russia.

Mr Verevskiy hopes the listing "will showcase vast upside" opportunities in Ukrainian agriculture and predicts growth rates will increase in coming years after farm land privatisation is sanctioned by the state.

"Seventy per cent of farmers still have a Soviet-style mentality, don't understand technology and don't, as a result, have high yields. With investments, Ukraine could double its grain harvests to 60 million tonnes in the not too distant future," he added.

ING is advising Kernel Holding SA, a vehicle that owns Mr Verevskiy's integrated bottled oil and agribusiness assets.

Kernel, considered a mid-sized Ukrainian business with an estimated equity value of $500m-$580m, will be the second Ukrainian company to list in Warsaw. Astarta, a Ukrainian sugar producer, raised $32m last year by floating an 18.8 per cent stake.

"The liquidity for a company of our size is expected to be high in Poland," said Mr Verevskiy. "We hope for substantial demand from Polish mutual and pension funds."

The Warsaw exchange has a special programme to entice Ukrainian companies to list in Poland; a Ukrainian company gets the benefit of listing on a European Union market at a much lower cost than doing so in London. Polish pension funds, which have about 140bn zlotys ($55bn) in assets, can invest 40 per cent of their holdings in stocks, providing one of the largest investment pools in the region. The WSE has had 61 IPOs this year, more than the rest of central Europe's bourses combined.

"We have 20 foreign companies on the exchange and more are coming," said Robert Kwiatkowski, responsible for the WSE's Ukrainian programme. "Warsaw is becoming a regional financial centre."

The funds raised by Kernel will be pumped into new plants for processing sun seeds, rapeseeds and soybeans, port facilities, and acquisitions abroad. Kernel controls 35 per cent of Ukraine's bottled sun oil market exporting the rest to Europe, Asia and other markets. The group also controls the largest private grain silo network in Ukraine and ranks as one of the country's leading grain exporters.

Source: By Roman Olearchyk in Kiev and Jan Cienski in Warsaw

Poland's PKO BP approves issue of 1.6 bln zlotys in 10-year bonds

WARSAW (Thomson Financial) - Poland's largest bank PKO BP said today it has approved an issue of 1.6 bln zlotys in 10-year bonds, as it seeks funds to finance booming demand for domestic loans.

The lender said in September it will issue bonds in either zlotys or euros and will have the right to buy back the bonds after five years.

The bank said the bonds were priced at the Warsaw interbank offered six-month (WIBOR) rate plus 100 basis points, rising to 125 basis points if the bank did not use its call option to buy back the debt after five years.

Source: By Piotr Skolimowski, www.forbes.com

Warsaw shares close down; commodity stocks, TVN and TPSA cap losses UPDATE

WARSAW, Oct. 26, 2007 (Thomson Financial delivered by Newstex)
Warsaw shares closed down a touch, with falls among major banks overshadowing gains from commodity stocks, broadcaster TVN and telecom TPSA, which took heart from higher open on Wall Street.

The blue-chip WIG20 gauge was down 0.15 pct at 3,855.61, after rising close to its all-time high of 3,919.10 hit early July. The broad-based WIG finished down 0.37 pct at 63,366.34.

Strong earnings from software giant Microsoft (NASDAQ:MSFT) encouraged rises on Wall Street. Investors also hope that the Federal Reserve will lower US interest rates again next week.

'People probably think that the worse it gets, the better it will be, awaiting a rate cut by Fed next week,' said Wojciech Wosko, broker at BZ WBK in Warsaw. 'Next week the Warsaw bourse will brace itself for Fed's Wednesday decision.'
Poland's largest telecom TPSA led gainers in Warsaw with a 0.7 pct rise, continuing to benefit from better than expected results showed yesterday. Sole listed broadcaster TVN jumped 4.0 pct to its highest level since early May after the company raised its 2007 revenue forecasts earlier this week.

Commodity-related stocks, among them Europe's biggest copper miner KGHM and Poland's largest oil refiner PKN Orlen, were also up, rising 1.4 and 1.2 pct respectively, taking their cue from rises in copper and oil prices.

But gains were capped by the banking sector. Investors decided to take profits from leading lenders on concerns about their third-quarter results after a slowdown in home loan and mutual fund growth took the shine off Bank Millennium's results last Thursday.

The gas monopoly PGNiG also declined after recent run-up in its share price, while bathroom-fitting maker Cersanit and construction company Polimex lost 4.3 and 1.8 pct, respectively.
Source: by Adrian Krajewski, money.cnn.com

Zensar sets up innovation centres in Poland, Hyderabad

Hyderabad: IT solutions provider Zensar Technologies announced the setting up of two innovation centres here today with one based in Hyderabad and the second in the Polish city of Gdansk and shortly plans to network five such centres globally.

The other centres would be based at Singapore, Shenzhen in China, and the UK, wherein the company is poised to invest about Rs 100 crore.

The Chief Executive Officer, Dr Ganesh Natarajan, said that the centre in Poland is located strategically and serves as a hub for the European region. All the global innovation centres located overseas would recruit people locally, train them to meet the company requirements. Zensar employs about five per cent of its staff overseas.

Addressing a press conference here today, Dr Natarajan said that the company plans to double its headcount within 24 months from 4,000 people now and make Hyderabad its second largest centre after Pune.

The CEO of Zensar OBT Global, Ramesh Kodali, and the Executive Vice-President of Innovative Technology Solutions, Zensar, V. Balasubramanian, said that these innovation centres bring about significant automation in the way services get delivered to enterprises.

While the Hyderabad centre would focus on research and template development for pharmaceutical and textile industries, Gdansk centre would serve as the innovation hub for Europe and provide architecture for multi-shore development using Zensar's Global Delivery Platform.
Source: sify.com

Poland budget deficit up to 14-15 pct of full-year plan after October

WARSAW (Thomson Financial) - Poland's budget will show a deficit of 14-15 pct of the 30 bln zlotys full-year plan for the ten months to the end of October, up from a small surplus after September, Deputy Finance Minister Elzbieta Suchocka-Roguska said.

'We estimate initially that after October, the deficit may have been 14-15 pct,' Suchocka-Roguska told Thomson Financial News.

She reiterated that the deficit for the whole of this year was likely to come in below 23 bln zlotys, compared to the original plan of 30 bln. But she said it was 'hard to say' how much lower than 23 bln it would be.

The Polish budget posted a 198 mln zlotys surplus after the first nine months of this year as economic growth boosted tax inflows into state coffers and agencies kept a tight lid on spending.

Source: By Paweł Sobczak,