Construction up despite the gloom

ven though the beginning of February saw adjustments on the Asian and European markets, US trading floors continued to enjoy a green period. The economic data was good enough to inject optimism into investors' minds, while the publication of disappointing data has dampened the belief that the US central bank will turn off the money tap (currently at the level of USD 85 bln per month). All the good vibes have been amplified by the improved prospects of avoiding going over the so-called fiscal cliff. In Europe the situation has become relatively stable. The EU summit ended with the adoption of the European Union budget; however, the macroeconomic data leaves us under no illusions about the weakness of Europe's economy and the desperate situation of Greece and Spain, both of which have seen their unemployment rates shoot up to over 20 pct. Such a background makes you appreciate the small things, such as the January growth in the indexes that reflect the health of the German economy - both the Ifo and the ZEW went up. This is particularly important for the Polish economy, where the data confirms that the slowdown will be deeper than in 2009. The double-digit contraction in industrial production (the worst for four years), retail sales at their lowest for three years, and the several-dozen-percent decline in the value of new projects in the construction sector, all paint a depressing picture of the economy. Despite the belief of many economists that the main slump occurred in December and January, getting out of it will not be quick. Lower interest rates are expected to help (so far they have been brought down to 3.75 pct), which has also been a theme of the prime minister's recent speeches, as well as the return to financing infrastructural projects, now with the help of a special state company - Inwestycje Polskie. The question is whether the systemic errors will be avoided that we are familiar with from the investment boom prior to Euro 2012. Moving down from the macro level to the situation on the WSE in the last few weeks, the factor attracting most attention has been the growth of the WIG-BUD index, as well as the decreases in the other indexes that followed. The above-8 pct growth in the construction sub-index is particularly impressive compared to the WIG20, which lost over 4 pct in the first six weeks of the year. Three out of the four listed Mostostals saw increased share prices, including Mostostal Warszawa, which went up by more than 20 pct (the company has introduced a plan to save at least PLN 45 mln). A number of settlements have been made by the largest companies that found themselves in trouble last year. The Industrial Development Agency has formally acquired more than 22 pct of Polimex's shares for PLN 150 mln (the agency will eventually acquire up to 32.9 pct with a recapitalisation value of no more than PLN 278 mln). Meanwhile, PBG - another troubled construction giant - gave up on looking for help from the IDA; another company from the group - Energomontaż Południe - went into bankruptcy open to arrangements. New firms listing on the WSE include shopping gallery developer Czerwona Torebka, which made its debut at the end of the year. Even though the company raised less than 10 pct of an expected PLN 250 mln, the debut was still impressive, as the share price increased by over 40 pct. Polski Holding Nieruchomości, a state-owned company with a portfolio of 150 properties worth over PLN 2 mln, was also floated in February. Around a quarter of the company's shares, each priced at PLN 22, went to investors during the public offering. The shares gained over 3 pct on the day of the debut. The state is now looking for a strategic investor for its remaining stake. Analysts expect a slowdown on the housing market in 2013. The end of the governmental subsidy programme in 2012 gave sales a boost at the end of last year, but the crisis and rising unemployment will not create the ideal conditions for anyimprovement. Nevertheless, residential developers are looking to the future with a measure of optimism - one of the leaders of the sector, J.W. Construction, wants to sell 100 units per month. Analysts are somewhat sceptical of such declarations, pointing to the high supply of apartments on the market, while reminding us that residential developers' margins will shrink in 2013. (Mir)

BUX finds reasons to be cheerful
The beginning of the year was a time of variable moods on the Central European stock exchanges. While the WIG20 and PX lost app. 4 pct each, the BUX gained more than 6 pct, following the US stock exchanges rather than those in Europe or Asia. The growth on the Hungarian bourse came despite the country's poor economic situation - in Q4 the GDP of Hungary shrunk by 2.7 pct q-o-q and by 1.7 pct for the whole of 2012. If the situation stays the same in Q1 2013, the recession might turn out to be longer than that of 2008/09. The Czech economy also shrank in 2012, but only by 1.1 pct.