Waiting for winter to bite

Europe is continuing to scare investors. The end of November and the beginning of December resembled previous months - the tense situation was only eased by small bounces resulting from good economic data, while prices remained extremely low on the trading floors. Hopes for a more optimistic 2012 were supposed to be brought about by the EU summit of December 8th-9th. Unfortunately, it failed to accomplish this feat. Instead, it was actually the Christmas mood that was responsible for the calm on the financial markets. Investors waited anxiously for some concrete decisions to be taken (e.g. the green light to issue common eurobonds for euro countries, and stronger action from the European Central Bank in buying the bonds of most indebted countries from the market), but all they got were the huge loans granted to European banks by the ECB (nearly EUR 500 bln before Christmas). Meanwhile, ratings agencies continue to lower their ratings (such as in the case of France), while economists are now forecasting a recession in euroland in 2012. So it is no surprise that the indexes fell, albeit not so sharply. And all this despite the fact that signals from other parts of the world, such as China, were reasonably positive, as they were also in Poland. The economic data for Q3 actually turned out to be rather good (a growth of 4.3 pct and high consumption and investment activity), also the partial data emerging for Q4 (high increases in production and retail sales in November) was also optimistic. On November 30th, the WSE experienced one of its best sessions in the last 15 months - with the WIG 20 increasing by 4.5 pct. Of course, this only represented an isolated bounce of the index. The end of the year effect on the WSE was not excessively optimistic - during the four weeks before Christmas the main indexes - the WIG and WIG 20 - lost 3.4 and 4.1 pct respectively after a bounce at the beginning of December, falling to a level comparable to the third week of November. The trade indexes are also still looking for their bottoms - WIG BUD lost as much as 8 pct, falling to just above 2,300 points (the lowest in six years) and WIG-Developers shrank by 4.5 pct. Only two companies from our list of firms in this sector managed to finish the period with rises: Rank Progress and GTC (in the case of the latter this could have been a rebound after a poor November - the developer lost as much as 26 pct in the previous ranking). A number of developers registered double-digit reductions in share prices. By contrast, the stock of four companies in the construction sector grew, including Polimex, whose heavy weight in the index helped to mollify the falls on the WIG-BUD.
One of the most important events in December for construction companies was the dismissal of the president of Mostostal Export, Michał Skipietrow, who has headed the company for 21 years. A longstanding ownership dispute has blocked the firm's development and has also proved to be an obstacle to a number of issues the company has been trying to settle in the courts. Another noteworthy piece of news was the huge decrease in the share price of Trakcja, which saw its capitalisation collapse by half within just a few weeks. The biggest decreases hit Trakcja after it transpired that five banks had terminated credit agreements with two of its subsidiaries, Poldim and Silentio. In practice this translates into the need to stump up several million złoty. Nevertheless, Maciej Radziwiłł, the head of Trakcja, claimed on the pages of Parkiet that the troubles of Poldim would not endanger the parent company. The problems stem from a PLN 700 mln takeover of Lithuanian group Tiltra by Trakcja in 2010. Meanwhile, the search for a sector investor for ABM Solid continues (the company's shares were priced at over PLN 20 a year ago but are now just under PLN 2), but so far its extraordinary meeting has not agreed to a rights issue. This year is going to be a difficult time for the industry, because on the one hand many construction companies have a lot of debt and on the other their order portfolios are not growing as quickly as they might have hoped. Developers' prospects look slightly better, even though a large supply of apartments and further restrictions on mortgage lending by banks imposed by the financial supervision authority lead us to take residential developers' optimism with a pinch of salt. (Mir)

Logic-defying increases
Even though a crisis is more likely to occur in Hungary than in Poland, the Hungarian stock exchange seems immune to the macroeconomic news. Two ratings agencies (Standard & Poor's and Moody's) have lowered the financial ratings for the country, while the government argued with the European Commission over the terms of financial help for the country. Nevertheless, the BUX index rose by nearly 3 pct, benefiting from the optimism of the last week before Christmas, when it went up four days in a row. Also the Prague bourse registered an increase of over 3 pct - the small stock exchange in the city was pushed forward by the increases for ČEZ and other banks, as well as favourable news from the German economy.