Fragile balance

After finally forming a new government, Greece's problems are no longer the main cause of fear among investors, now that Spain has taken over the mantle of the stock exchange ?scarer'. Even though European Union leaders decided at the beginning of July that Spain's banks would be thrown a lifeline, the euphoria only lasted a few days. The scale of the aid, which could even reach EUR 100 bln, prompts the question: who's going to pay? Meanwhile, black clouds are forming over Italy after Moody's cut its credit rating. Investors were not so perturbed by this, because there was more bad news to be digested. In the US, forecasts for the country's GDP growth over the next few months are now being revised downwards, and investors are awaiting companies' Q2 results with trepidation. Meanwhile, China's GDP has slowed down six quarters in a row, and the central bank of the euro zone has not only granted the highest liquidity loans on record to Spain's banks (over EUR 350 bln in June), but has also cut interest rates sharply to stimulate banks into pumping money into the economy in the form of loans. Despite the bad news outweighing the good, Warsaw's trading floor remained positive until very recently, as it managed to resist the bearish moods of western stock exchanges. Only at the beginning of July was there a greater correlation between the stock exchanges of more developed countries and the Warsaw bourse. Foreign investors, having assessed the risk from the global economy, started selling Polish shares, which - although admittedly a relatively shallow market - resulted in the main WIG index going up by 1.4 pct over the period in question, accompanied by a simultaneous drop in the WIG20 (where foreign investors are active) of nearly 2 pct. WIG-Developers had slightly worse results than WIG20, losing over 2.6 pct. WIG-Construction was behind the other indexes, slumping by 11.4 pct. The construction industry is still the focus of investor and media attention, and not without reason. After the declaration of its bankruptcy, shares in PBG bounced a little, due to the composition proceedings moving forward, which gave the company a chance to get out of trouble. This is likely to be the case, given the fact that companies such as Energomontaż Północ and Naftobudowa have successfully completed composition proceedings in the past. Meanwhile, the board of PBG has changed - Wiesław Różacki, the head of Rafako (a subsidiary of PBG), has become the president, announcing that a list of creditors is to be drawn up in September, after which effective negotiations on an arrangement can start. However, it was not PBG that was bringing the sector down. It was fears over the health of another giant - Polimex-Mostostal. Its share price has plummeted by 30 pct and the company itself asked its creditors for the suspension of its debts for four months, at the same time drawing up a package of measures to restore its financial liquidity. Its short-term liabilities could give investors a headache (Polimex has to redeem bonds worth PLN 100 mln). After the troubles of the industry's big boys, the bankruptcy of ABM Solid seemed to be a less important piece of news. Rumours had spread that Chinese investors were interested in propping up the company, that a contract to restructure its debt had been signed with creditors in the spring, and that Unibep were considering helping ABM - but in the end a bankruptcy petition open to arrangements was submitted at the end of June. Meanwhile, Budimex appears to be in rude health, having signed a number of new contracts (for work on the Stawiska and Lublin ring roads, as well as on an incineration plant in Kraków). The ?Dziennik Gazeta Prawna' newspaper has reported that the company wants to enter into a partnership with Spanish group Tecnicas, which specialises in energy construction. The sector has been attracting the attention of investors, but it is worth mentioning that the development sector has also observed the bounce of Globe Trade Centre after its successful share flotatation, thanks to which the company raised PLN 445 mln and - so the company claims - secured the feasibility of implementing its plans for the next three years. ? (Mir)

Up in one capital, down in the other
The beginning of the summer was a happy time for investors on the Prague stock exchange. Its PX index registered a growth of 3.5 pct, as it had done a month earlier. Although the Czech stock exchange grew as the June moods on the global stock exchanges also improved, it still remained relatively resistant when the mood abroad darkened. Despite this growth, Orco's share price fell by as much as 20 pct - down to CZK 58, i.e. lower than in Warsaw (-11 pct), while the price of ECM remained unchanged at CZK 25. The BUX in Budapest slipped back by 3.5 pct, despite the country moving closer to a successful resolution of the deadlocked situation over International Monetary Fund aid.