Stagnation all around us

As the international financial institutions currently threaten us with an economic slowdown, and the American central bank stops printing money, the S&P 500 broad market index in New York, however, continues to register historic highs. The sanguine mood of consumers across the ocean, which is supported by strong data from the sector and better than expected Q3 results, was reflected in share prices. Even though analysts are aware that prices are already inflated and an interest rate increase cycle is to start in the US in possibly the next two or three quarters, the general mood is predisposing people to buy more goods. This mood was also shared by the investors active on the European trading floors: the German DAX hit a 2014 high in the middle of the year. Nevertheless, for the EU’s largest economy there are currently no significant pointers towards better macroeconomic prospects. The IFO business climate index, which reflects the mood of German entrepreneurs, fell instead of the predicted growth, and many companies have cooled their expectations for the future after reporting their Q3 profits. Compared to the healthy prospects for the American economy, the stagnation expected in the Eurozone could have an impact on the performance of the Polish economy.

And the situation is not clear-cut in Poland,

either. The lowering of the forecasts for this year and the next comes in sharp relief to the economic results in Q3. GDP unexpectedly grew by 3.3 pct y-o-y, even though according to analysts growth was not expected to exceed 2.8 pct. On the one hand, the Polish economy is currently distinguished by its rapid rate of growth pace compared to the rest of the European Union – a fact that government representatives are eager to point out – on the other, one of the most respected research bodies, the National Bank of Poland, has announced that the economy has entered a period of slowdown and increasing prices. In this situation the behaviour of the WSE has been dominated by stagnation. Its indexes did not change significantly in the course of the month. The WIG increased by 1 pct and the WIG20 by 0.7 pct, fluctuating at around 2,400 points. According to the analysts, any kind of turnaround is unlikely, because there are no buyers to be seen on the floor of the WSE at the moment. Although the low interest rates that are still in place continue to support aggressive forms of investment and inflows into investment funds, the lowering of the share limit for open pension funds (from 75 pct to 55 pct), which is expected at the end of the year, is not likely to help the stock exchange in terms of growth.

When it comes to the sector indexes,

WIG-Developers stood out, increasing by 1.4 pct. The share price of Orco bounced back dramatically, exhibiting growth of 40 pct. The company has issued almost EUR 60 mln of shares and announced changes in its management as well as to its strategy, which will now be to focus on development projects and utilising its extensive land bank. The shares of commercial developers also went up – both GTC and Echo Investment’s prices rose by 4 pct. MBank’s analysts recommended ‘buying’ for both companies and estimated their share values at PLN 7 and PLN 8 respectively. Meanwhile, the prices for residential developers suffered a knock – shares in J.W. Construction were the ones that suffered the most. The company’s results for the first three quarters revealed that its revenue had decreased by PLN 100 mln compared to last year, falling to PLN 155 mln. However, it did generate profit of PLN 8 mln, up from PLN 7.4 mln a year earlier. Another large developer, Dom Development, was doing rather better, seeing its share price go up by almost 5 pct after Q3 results that turned out to be better than analysts’ expectations. Over the first nine months of the year, the developer generated profits of PLN 26 mln and revenue of more than PLN 520 mln. In spite of the tense situation surrounding another developer, Gant, the share price of the Wrocław-based company increased – and this happened despite making a loss of over PLN 150 mln in the first three quarters and the unusual predicament of the company. An extraordinary meeting of shareholders, which was to have taken place in November, was cancelled. Despite all this perturbation, the management of the company still hopes that thanks to the restructuring of its debt, it will be able to resume its operations and projects in 2015. Another case of debt restructuring now seems to be headed for a happy ending. The creditors of construction giant PBG are now to acquire 75 pct of its shares. In the first three quarters the company suffered a loss of almost PLN 166 mln. Meanwhile, another developer is now heading for the Warsaw trading floor: Atal is make its debut on the WSE at the beginning of 2015. In 2013 the company sold over 1,300 apartments and earned revenue of more than PLN 280 mln. ν (Mir)

Not so good over at the neighbours’

The optimism that returned to the more developed markets proved not to be enough to encourage investors in Budapest to shop for shares. The BUX index lost almost 3 pct, falling to a level of 17,270 points. Meanwhile, the PX50 index on the Prague stock exchange experienced a 4 pct growth. However, it is worth remembering that this is the least fluid market of the three Central European trading floors. Furthermore, its high price/profit ratio might soon tempt investors to cash in on their stock on the Prague exchange.