Developers smiling, while constructors frown

At the beginning of September the central banks of the eurozone and the US announced that they were finally taking decisive action. The European Central Bank, directed by Mario Draghi, decided to launch an unlimited government bond buy-back programme in exchange for a country committing itself to implementing a savings plan. This means that the bankruptcy scenario looming over the countries of the southern Europe has been put off for the present. It is perhaps arguable whether this fiscal consolidation, which involves granting unlimited help to countries threatened with insolvency, is the right thing to do; but on the other hand, the ECB's strategic announcement could lift the mood on the global stock exchanges for some time. However, it could turn out that as the problem of indebted governments recedes, investors will focus instead on the real economy, the health of which does not look encouraging. According to the ECB, the recession in the eurozone is expected to amount to 0.4 pct of GDP this year (the previous forecasts were that it would only shrink by 0.1 pct), while next year growth is to amount to only 0.5 pct. But for now the stock exchanges, particularly in Europe, have shot up. The US Fed has also improved the mood by starting the third round of quantitative easing, or in short, pumping dollars into the financial markets. This time it will form part of a framework involving buying back debt securities based on mortgages from financial institutions. The decision elevated the indexes of American stock exchanges to levels unseen for many years (the S&P 500 grew to its highest level since 2007 and the Nasdaq since 2000), which confirms a thesis already put forward by analysts that the FED basically ?pumps' the American stock exchanges simply by making decisions on easing its monetary policy. The Warsaw Stock Exchange tentatively followed the global trading floors - this time the WIG was the one to grow most, by over 5 pct. This might seem a little surprising, because the WIG20 has been the usual beneficiary of stimulae from abroad, as its companies are often bought by global investors. Meanwhile, the blue-chip index grew by just over 4 pct. WIG-Construction was as usual in the red, while WIG-Developers grew by over 3 pct. Apart from the mood abroad, the situation on the market was determined by the macro data showing that growth in Q2 turned out to be distinctly lower than in Q1 at 2.4 pct versus 3.5 pct. It was also lower than the market's expectations, which had predicted growth in the region of 3 pct. The situation, however, seems to be hopeless for two construction companies: ABM Solid and Hydrobudowa. In the first case, its bankruptcy open to arrangements has now become a full liquidation, while the latter company is also to be liquidated. Hydrobudowa has announced that its combined redundancy programme applies to 90 pct of its workforce. Meanwhile, PBG has informed us that its losses in Q2 amounted to PLN 1.6 bln, mainly due to making reserves for contractual penalties and write offs. The company is applying for aid from the Industrial Development Agency, which is in fact the same as applying for public aid and requires European Commission consent. Polimex-Mostostal also published its results, reporting a loss of PLN 388 mln in Q2, of which app. PLN 300 mln gross was inflicted by corrections in road contract evaluations. However, it is the company's liquidity that is the bigger worry - its cash flow amounted to minus PLN 447 mln. The management of Polimex has informed us that the company needs app. PLN 500 mln to convert its debt (which amounts to PLN 1.32 bln in total) and continue its operations. Developers have also been publishing their results: Dom Development is doing rather well, as its profit increased to PLN 30.2 mln compared to PLN 7.1 mln a year earlier, while its revenue nearly doubled to PLN 308 mln. Other big developers had weaker results: J.W. Construction earned PLN 8.5 mln compared to nearly PLN 25 mln a year earlier, while Gant registered a loss of PLN 7.5 mln, although according to representatives of the company this was a purely bookkeeping loss resulting from a revaluation of the company's assets. Gant has also informed us that its hopes of selling 1,100 apartments in 2012 might not be fulfilled. (Mir)

Hungarian joy
Investors on the Hungarian stock exchange were definitely in the best mood over the last few weeks - the BUX rose much more than the WIG20 and the PX, exceeding the 19,000 point level and increasing by nearly 9 pct in the course of one month to its highest level since April. The announcement of the large-scale aid programme for eurozone countries has been very well received in Hungary, particularly since Hungary is also to receive some aid from the IMF. The Prague PX index in the meantime was up by 4.2 pct. Orco, however, lost as much as 36 pct as its share price fell to CZK 39, whereas that other troubled developer, ECM, enjoyed a stable price of CZK 25.