VW puts the bourses in a spin
Stock market report
The second half of September was meant to be free of the negative factors that could block the upward correction following the summer holiday declines. The state of the Chinese economy was temporarily moved into the background after the American central bank, instead of announcing an increase in the cost of money after ten years of super-low interest rates, expressed its concerns about the global economic situation and opted not to increase interest rates. This in turn had a positive influence on investors’ attitudes towards purchases, particularly on developing markets. On the other hand, it meant that the policies of central banks (other than that of the USA) might be falling short of what is required. In the end this tentative optimism was submerged by the Volkswagen scandal, after “ inconsistencies” emerged in its measurements of fume emissions. The scale of the phenomenon and the size of the German group, the possible consequences and the probability of similar “negligence” by other giants of the automotive industry, was only ever going to pull the stock exchange indexes down. Only at the beginning of October was there a revival among buyers. The Frankfurt stock exchange had bounced back after the VW scandal and this time investors unanimously interpreted the publication of the minutes of the American Central Bank’s meeting rather favourably, in terms of maintaining the record low cost of money. Weaker data was published on the condition of industry in euroland, suggesting that this economy would follow the slowdown in China and its current pace will fall off. Meanwhile, in Poland the sales and industrial production data also pointed to lower than expected economic growth (around 3 pct). However, the upcoming parliamentary elections then moved into the foreground. The promise made by the Law and Justice party that it would abolish the copper tax helped not only KGHM but also the entire stock exchange. Generally speaking, the Law and Justice party has become economically milder, thanks to which, for example, the valuations of the banks, which dominate the WIG 20 and were threatened by the possible introduction of a tax on assets or financial transactions on the stock exchange, have not declined so dramatically (WIG Banks was even doing better than the broad market indexes). Investors are clearly not so afraid of the new administration.
WIG 20 was the weakest in the monthly statistics, losing 3.6 pct, clearly more than the broad market index (a decline of 0.8 pct). Unlike the previous month, the sector indexes behaved much better than those of the broader market. WIG Construction gained 3.6 pct and WIG-Developers as much as 6.2 pct. The statistics for the last twelve months look interesting – the WIG 20 is down by 12 pct and the WIG has lost 3 pct. WIG Construction is at its highest level of the last four years. Investor optimism over this segment is mostly results due to the anticipation of EU funds earmarked for infrastructural investment: PLN 112 bln for the roads, PLN 68 bln for the railways and PLN 55 bln for the energy industry. Apart from this, relatively large amounts will go to the water and sewage sector. Construction companies are among those that gained around 100 pct over the last twelve months, including Elektrobudowa (95 pct) and Mostostal Warszawa (111 pct). Following its weaker results in 2013 and 2014, Mostostal is now getting back on its feet thanks to the help of its Spanish owner. As regards other companies that have been improving, it is worth mentioning Polimex. After the consolidation of its shares, the company has left the group of ‘penny’ companies. Following the adoption of the strategy, this forms another element in the rebuilding of the position of the former industry giant.
The decision of Marvipol to buy up a 33 pct stake in Torpol, which we wrote about last month, reflects the interesting prospects in terms of railway investment. Subscriptions will last until November 20th. If Marvipol manages to buy the full 33 pct, it will have splashed out almost PLN 90 mln in doing so. This is another interesting move from this developer, having announced its entry onto the warehouse market in cooperation with major player Panattoni. The company is clearly planning to expand in a diversified manner, but one centred on the development and construction business, as is evidenced by its plans to shift operations away from the distribution of exclusive car brands and to form a separate company listed on the Warsaw Stock Exchange.
More money on the Danube
The Budapest stock exchange was the best performer during the rather changeable period of the last few weeks: the BUX gained 2.3 pct, while the PX50 in Prague fell, but this was a smaller decline (compared to the WIG 20) of only 1.5 pct. The Warsaw Stock Exchange has also been the weakest in terms of rates of return since the beginning of the year: the WIG 20 has lost 8 pct while on the BUX investors have been able to earn 26 pct.
