Making up for the lost ground

The health of the US economy is helping to perpetuate the good mood of investors, which combined with the low inflation and very low interest rates is providing the ideal environment for economic growth. In Q2 American GDP increased by 4.2 pct y-o-y, even though economists had estimated that it would be no more than 4 pct. On top of this the consumer confidence indexes look highly promising (consumption constitutes two-thirds of the US economy) as do the forward indicators. So it should be no surprise that the American S&P 500 exceeded the 2,000 points threshold and the annual rate of return of the index came to over 20 pct (whereas the rate of return from the WIG20 remained in single-digits). The situation in the eurozone looks slightly worse – Germany and France are catching their breath and their economies are in stagnation. The condition of the German economy is particularly important from the point of view of Poland, for which Germany is the main trading partner. And this situation is reflected in the Polish economy, the dynamics of which weakened slightly in Q2 (3.3 pct in Q2 after 3.4 pct in Q1 y-o-y). In addition the growth structure, which is mostly based on the growth of stocks, has become a cause for concern for economists. The weaker economic climate is also evident in forward indicators: six months of falls in the PMI index combined with the current gloomy data, i.e. a low growth dynamics in retail and industrials sales (in August the value of industrial production decreased by 2 pct), have led to downward adjustments in the economic growth forecasts for this and the next year. In August there was an additional decline (of 3.6 pct) in construction and assembly production, which had shot up in the first few months of the year (partly thanks to the light winter). The data for the Polish economy did not have much of an impact on the state of the Warsaw Stock Exchange, which was clearly making up the ground lost to stock exchanges further west. This time the Warsaw trading floor joined those displaying growth, as a result of which the WIG20 index increased by 7.3 pct and the WIG by 8.9 pct. In mid-September, the WIG20 reached its highest level since December 2013, as did the WIG. For the main and the oldest index on the WSE, 54,000 points is a return to levels unseen since before the financial crisis. The WIG-Construction performed even better than the WIG. Its growth amounted to almost 10 pct and made it possible to make up for the losses inflicted by the summer correction. WIG-Developers did not look good against this background as it experienced a small loss, going completely against the grain of the broad market. Perhaps investors considered that despite the good conditions for increasing sales (the economic growth and low interest rates), their financial results still left a lot to be desired. This can be seen in the profit ranking for H1 2014 and 2013. Giants such as Dom Development and LC Corp suffered decreases in their net profit. The former generated just over PLN 10 mln in profit compared to PLN 27 mln a year earlier, while for the latter it was a case of PLN 31 mln vs. 44 mln. The profits made by J.W. Construction and JHM Development were at a similar level – PLN 6 and PLN 4 mln respectively. Robyg’s profit increased considerably, up to PLN 22 mln from PLN 15 mln, while Polnord managed to recover from a loss to a net profit. However, it was the value of Reinhold that has shown the strongest growth of the last few weeks. The company has announced the planned acquisition of a Swedish company specialising in the construction of module houses, which are faster and simpler to assemble. PHN also made up for its losses of the last few months and announced a new strategy for increasing its asset value, the majority of which the company is planning to give back to shareholders in the form of dividends. Despite some ambiguous financial results, there is still much activity among developers – J.W. Construction has raised PLN 110 mln from the issue of new shares, while GTC has announced a PLN 700 mln flotation, the funds from which will be invested in the purchase of office buildings and shopping centres across this part of Europe. When it comes to the construction companies, the prices of the three Mostostals all went up – all had double-digit dynamics. For the Płock-based company this was a reaction to its positive semi-annual results, 30 pct higher revenue and its return to profitability, among other factors. Investors also appreciated the attempts of Mostostal Zabrze, which should raise PLN 50 mln from the sale of properties and has also concluded a ten-year lawsuit against Altus, which is owned by a company Mostostal Zabrze had filed claims against. ν (Mir)

Prague and Budapest behind Warsaw

As in in July, the Prague PX50 index was the most resistant to declines. In August and at the beginning of September it was marked by a similar resistance to the revival on the global stock exchanges. As a result its quotations have not changed much (-0.5 pct), a results of the limited size of the Prague stock exchange. The Budapest BUX, which is usually characterised by higher turnover, did not manage to beat the WIG in Warsaw. It grew by just over 7 pct, mostly on the wave of good news from the stock exchanges of developed markets.