Correction without panic

However, there was no panic on the global bourses similar to that experienced by investors six months ago. The correction mainly occurred on western markets, and was rather shallow in the US and Asia. This was particularly visible in late March and early April, when the European stock markets closed in the red, whereas in the USA and China they remained in the green on a weekly basis. The price falls were not only a consequence of the profit-making or the quarter coming to an end. They were triggered by PMI data showing weak investor confidence - in Germany (the biggest European economy)the index plummeted below 50 points, the level that marks the threshold separating economic development from stagnation. At the end of March, the Fed published its session report, in which it stated that the central bank would not increase the supply of dollars, even though this had a positive impact on the world economy in recent quarters. Finally, the problems faced by southern Europe were also deterring investors as they wondered whether the Greek path would be followed by Portugal or even Spain. The size of the latter (the fifth largest economy in Europe based on nominal GDP comparisons) was particularly troubling for investors and they paid close attention to every single bond offer launched by the Portuguese, Spanish and Italian governments. In mid-April, figures for the first quarter in the USA were published revealing a positive trend: industrial companies, service providers and financial sector businesses recorded good results.
In Poland the two major indexes, the WIG20 and WIG, both lost 2.2 pct. Analysts noted that in the case of the WIG20 index, listed companies have been receiving good market valuations, which should, at least in theory, encourage investors to buy. Unfortunately, the WIG-BUD lost app. 10 pct while the WIG-Deweloperzy fell by 5.5 pct. The construction companies' index was dragged downward by the falling share prices of Polimex, Mostostal Warszawa and PBG, which all registered double-digit slumps in just one month. Meanwhile ?PBG held an extraordinary general meeting at which shareholders voted against issuing shares and Euro-bonds, deciding instead to issue convertible bonds. The company is to now planning to launch 12 bond issues, each being worth PLN 100 mln. The bond offer could raise as much as PLN 1.2 bln. The company is still looking for a core investor to help it gain a better position in market segments with a higher-than-average margin, such as the oil industry. PBG intends to restructure its activities via lowering operating costs by 10 pct, which involves the sale of a number of its subsidiaries, including the developer PBG Erigo. PBG is also planning to pull out of the road construction market. In mid-April a rumour started to spread that ?PBG and Polimex were planning to merge. The share prices of both companies rallied, but neither party would confirm the rumour. Polimex is struggling to reduce its debt burden and is looking for buyers for its development assets. Meanwhile, Mostostal Warszawa is to have a new president. At the end of May, Jarosław Popiołek is leaving the post after seven years. Despite the significant falls suffered by Mostostal last month, many analysts still believe that it is the most attractively valued construction firm. Last month AMB Solid stood out, recording double-digit spikes in share prices. The company has announced that it has extended the terms of its agreement with its banks and bond holders for the preparation of a restructuring agreement.
Developers also registered falls in share prices, but they were rather less dramatic. The share price of GTC, the "baddie" of recent months, remained quite stable, while the shares of Wikana and Marvipol dived, and those of Reinhold and ED Invest went up. Meanwhile, Murapol has been planning to float on the Warsaw Stock Exchange. Around the end of June, the developer is to issue 8 mln shares with a total value of PLN 40-50 mln. And the list of newcomers is set to get even longer. The WSE may soon be welcoming Dolcan, ?Platinum Properties Group (moving from the New Connect market) and Polski ?Holding Nieruchomości, which holds an impressive PLN 3 bln property portfolio. ? (Mir)

Prague and Budapest behind the WSE
The stock markets in Hungary and the Czech Republic were ?significantly weaker than the WSE. The BUX index plummeted by 8.5 pct while the one in Prague PX lost 7.2 pct. Taking their cue from the foreign stock exchanges, the indexes of CEE stock markets slumped as well, recording levels in mid-April similar to those at the beginning of the year. It is still unclear whether Hungary will ask for international help to cut its budget deficit, but Hungary's public finance jigsaw is clearly affecting the mood of the country's investors. As for the Prague stock exchange, Luxembourg-based developer ECM's shares traded at a stable CZK 25.5, but Orco's price fell by 16 pct to CZK 86 - a bigger slump than on the WSE.