Still looking up

Other European trading floors also have not missed out on such rises. The CAC40 in Paris and the British FTSE rose by 14 pct and 8 pct respectively over the quarter. Despite concerns about the Eurozone’s most important economy, the German stock exchange has also seen a respectable 10 pct rise since the beginning of the year. This seems optimistic as the most important decisions affecting the global economy still lie ahead. The expected trade-agreement between the US and China should probably result in further increases – companies would be very likely to forecast better results and as a result there would be significantly more buyers. But the second unknown is Brexit – where the jostling continues as the original Brexit date has been postponed. The British government is standing its ground even though the UK parliament has already twice rejected the agreement it negotiated. Those who support staying in the EU are growing in strength (and in the number of petition signatures) and several scenarios are now back on the table. Investors are keeping a close eye on this because the trade ties between UK and the rest of Europe are of course extremely strong. When the uncertainty around Brexit is resolved, regardless of the final decision, the stock exchanges in Europe may react positively and when this is combined with economic forecasts that remain good and, even more importantly with the better economic data from Asia, it could also result in rises in Q2 2019.

Meanwhile in China, the Shanghai Stock Exchange also saw a good start to the year in response to the news that the government may stimulate the economy with legislation that is more favourable to foreign investors (due to come in in 2020) and a reduction in VAT.

Warsaw also saw slight increases over the first two weeks of March with the total value of stocks and shares having increased since the beginning of the year. The economic data in Q4 2018, when the economy grew by 4.9 pct, will, according to many economists, be the last really such good news with economic growth now having slightly slowed to around 4 pct. Salaries are continuing to rise quickly (at around 7 pct per year), which is certainly a boost to consumer spending (and also increases the demand for residential mortgages). You can also sense the upcoming election when looking at the country’s politicians – the ruling party has brought out its big guns, and proposed various types of cash benefits for voters with a total estimated value of PLN 40 bln. Will this in the light of the slowdown have enough of an effect on the budget to alarm investors on the stock exchange? The finance minister going on a so-called ‘sick leave’ seems to partly answer this question.

According to data from the WSE, foreign investors are playing an increasing role on the Warsaw Stock Exchange and now account for 60 pct of the bourse’s turnover, which means that global trends are likely to have more of an effect, especially on the WIG20. Local financial institutions now account for a smaller proportion of the deals and it is hard to expect any change in this until the launch of the employee capital plan (PKK) pension system. The fastest growing index of the sector was the WIG – Construction, which recorded a rise of 10 pct in less than a month. This is mainly a result of Budimex’s rising valuation – since it is the largest construction company and is responsible for most of the fluctuations of this subindex. As can be seen, investors believe in a company whose CEO quite openly states that 2018 was the most difficult in the company's 50-year history. The company set a new record for its revenues (PLN 7.4 bln, up by 16 pct). The falling profitability on the construction market has been slightly offset by the strength of the development segment for the stock exchange giant. In recent weeks, the group has reported a large number of contracts that it has won for road and railway projects, therefore it is of no surprise that the total value of Budimex’s order book is now in excess of PLN 10 bln. Torpol – a company that specialises in railway construction also saw a large rise in its share price and unlike other companies from this segment (ZUE and Trakcja), it has been rising for several months. What mainly sets it apart from its two rivals are its results – with profits rather than losses over 2018. The firm has now limited its activity in Norway, which was like a ball and chain dragging its share price down. Torpol is currently working on a new strategy and it has not ruled out entering new segments (such as roads and bridges). The shares of Mostostal Warszawa, which were up in value by 50 pct, rose even quicker than those of Budimex and Torpol. (Mir)

Pague the best this year

The Hungarian BUX is having a very good start to the year – it has risen by more than 7 pct since January 1st. Just as in Warsaw, its growth slowed down in March, which means that the PX 50 of the Prague Stock Exchange remains the leader when it comes to increases since January – the index of the smallest and least liquid bourse has risen by almost 10 pct since the beginning of the year. In Warsaw, the WIG20 saw a rise of almost 3.5 pct over this period.