Wave of optimism from outside Europe

The impact that the actions of central banks had at the beginning of September turned out to be both strong and durable.
The mood improved for several weeks; however, it should be pointed out that the market was also absorbing the strong data from the world economies, in particular the figures on the state of the US economy, where the leading indicators as well as the hard data (e.g. the unemployment rate, which has been decreasing for two and a half years) showed that there was also some basis for growth in the real economy. Fuelled by this, the S&P 500 broad market index increased to levels unseen on Wall Street since 2007. The data from Asia, China and Japan also provided grounds for optimism. However, there are still black clouds hanging over the eurozone, where economists suggest the crisis is to stay for longer. The calming of the mood brought about by the European Central Bank cannot hide the condition of the economy from investors. Unfortunately, the troubles of the eurozone are also now evident in Poland: industrial output in September turned out to be down - dropping by over 5 pct y-o-y, the worst result since 2009. Hardly anyone doubts that the economy is slowing down. So far the WIG20 index has registered a decrease of nearly 3 pct, while the WIG broad market index slipped by just under 1 pct. The sector indexes looked excellent against this background - WIG-Construction in particular, gaining nearly 16 pct. To sum up the September data, WIG-Construction was the best sub-index, with a 20 pct rate of return, while of the ten best companies four were constructors. Most of the talk was about Polimex - and the company had a really exciting month in store for its investors. Over several days politicians were engaged in trying to rescue the company, after which an agreement worth PLN 6 bln to construct a turbine building in Kozienice was concluded. The October extraordinary general meeting (EGM) of shareholders decided to issue bonds to the company's creditors (converting debt into shares) as well as to its strategic investor, the Industrial Development Agency (ARP), which is to take a stake of almost 33 pct in the company. It is to invest in the construction giant after Polimex signs a restructuring agreement with its banks and bond holders. At the EGM, it was also decided to sell a few subsidiaries. Its creditors have also agreed not to enforce its liabilities until the end of March 2013. According to analysts, all these measures prove that Polimex is probably through the worst and now its future largely depends on the actions of its management. The problems of two huge construction groups - first PBG, followed by Polimex - have led to the re-emergence of the idea of merging the two companies. Jerzy Wiśniewski, the main shareholder of PBG, brought up this possibility in mid-October, pointing out, among other things, the synergies in terms of energy-related projects. Polimex replied that possible negotiations could only start when both companies are out of the woods. PBG is currently applying for a loan of app. PLN 200 mln from the ARP. However, this form of public aid must be approved by the European Commission. The vicissitudes of the biggest companies pushed other stock exchange companies into the background. But it is worth mentioning the growth of Budimex, Mostostal Zabrze and Erbud. The WIG-Developers index also improved, partly due to the above-average results of commercial developers Globe Trade Centre and Echo Investment. The former company is now to build Galeria Wilanów independently after buying Polnord's half of the project; while the latter has been enjoying praise from analysts (especially from equity specialists KBC Securities). The sale of Polnord's stake has been welcomed by analysts, as it should improve the financial liquidity of the residential developer. Alterco is at the other extreme, after entering into a bankruptcy open to arrangements. Meanwhile, the fate of a possible stock exchange debut for Polski Holding Nieruchomości remains unclear, since the state treasury is not ruling out the finding an investor from the sector for the company. (Mir)

Cosmetic changes
The Budapest and Prague indexes behaved identically to those in Warsaw. The Hungarian index lost 0.4 pct over the month, while Prague fell by 0.3 pct. The BUX grew in the first half of September, buoyed by the wave of optimism triggered by the central banks.
Despite sliding back towards the end of the month, it remained at close to 19 pct. Investors in Hungary were upset by the government's decision to maintain bank tax at its current level. This unsettled the quotation of OTB, whose stock forms nearly 29 pct of the total value of the BUX exchange. Meanwhile, on the Czech stock exchange Orco's share price (in Czech koruna) increased strongly by 69 pct.