Better than for quite some time

The markets in Western Europe and the US also registered decreases, but much smaller than those in Japan. However, analysts have pointed out that the desire to make profits could lead to a correction on western markets, after the stock exchanges of developed countries reached pre-crisis levels at the beginning of 2013. This is all the more so because despite some actually rather good data, particularly from the US (a 2.4 pct increase in GDP in Q1 2013 and some healthy-looking consumer confidence indexes), the potential for stock exchange listed companies to improve their profits is limited. Meanwhile, in Warsaw the indexes strengthened: the WIG gained nearly 5 pct and the WIG20 grew by 4 pct, going some way to making up the gap from falling behind the Western stock exchanges in Q1. Analysts continue to point out that global investors might be willing to re-direct the money stream to the markets of emerging countries, a move that could be prompted by the high index levels of developed countries, as well as the probable end of profits on the bond markets of emerging markets. The economic data also suggest a possible bottoming out of the slowdown - Q1 GDP increased by only 0.5 pct, while investment and domestic demand decreased. The Polish Central Statistical Office (GUS) has reported that in Q1 companies' net financial results decreased by 25 pct compared to Q1 2012. As a result of the considerably slower pace of economic growth and lower inflation, the Polish government is preparing an amendment to the budget (after April the deficit had already risen to 90 pct of the level planned for the year); added to this, the issue of the final shape of the pension system and the role of open pension funds should be resolved in the near future, which is also having a substantial impact on the WSE. The government is also providing succour to the construction industry having announced two important initiatives: an amendment to the national roads' construction programme (with nearly PLN 36 bln to be spent by 2015) and the construction of two power station turbine generators in Opole at a cost of PLN 10 bln.
Meanwhile, the construction industry index increased by nearly 10 pct, while the developers' index was up by nearly 14 pct. The WIG-construction index surpassed its early March 2013 highs approaching the level of 2,000 points. In the case of the construction companies in our summary, only one suffered a decrease, while in the developers' index there were only two such companies.
The decision to build the Opole generators has improved the share prices of the companies involved - Polimex and Mostostal Warszawa. The last few weeks were particularly successful for Mostostal, despite poor Q1 results - its losses at the group level amounted to PLN 23 mln, compared to PLN 10 mln a year earlier, while its revenue fell to PLN 457 mln from PLN 712 mln over the same period. The company has again received help from its majority shareholder, Spanish group Acciona, this time amounting to EUR 15 mln. Polimex has experienced more serious perturbations in the last few weeks - at the beginning of June the company reported some problems with the implementation of its restructuring agreement signed at the end of 2012, due to its failure to raise PLN 250 mln from the issue of company shares and its failure to conclude annexes to a number of construction contracts by the end of May.
Daily newspaper 'Parkiet' has calculated that the revenue of the ten largest constructors fell by almost a third in Q1 to nearly PLN 3.2 bln, whereas their losses amounted to PLN 178 mln. The credit for the strengthening developers' sub-index has to go mainly to the soaring prices of Polnord (after a successful bond issue) and Gant, which reached an agreement with its creditors and is now rectifying its financial situation. Commenting on the recent growth on WIG-developers, analysts have also singled out the rude health of Ronson and Robyg and predict that J.W. Construction and GTC will be the potential beneficiaries of share price increases over the next few weeks.

Czechs in deep water

The Prague Stock Exchange has not followed the performances of the bourses in Warsaw or Budapest. A nearly 5 pct decrease pushed the index down to its lowest level since the autumn of 2012. The arrests of the prime minister's closest advisors in a corruption scandal has had a significant impact on the country's markets: as well as the Prague Stock Exchange, the Czech currency is also losing value. The situation is somewhat different in Hungary: the BUX increased by over 4 pct. The index in Budapest was also helped by the release of data showing the first rise in industrial production for a year. According to an analysis by Raiffeisen, in 2012 Warsaw accounted for 56 pct of the combined turnover of the four bourses. The other exchanges in the survey included Vienna, Prague and Budapest.