The beast with two bottoms

The spectre of a double-dip recession has hung over the world's stock exchanges since 2009, but never has the prospect of this second bottom stared investors in the face so much as in May 2011 It is still not clear whether the worsening mood across the world is only the sign of a further correction or something much more serious. Those who predicted that stimulating economies by increased governmental expenditure two years ago would have negative effects have proved to be right. Greece is now virtually bankrupt.  It is this country whose problems have effectively undermined stock exchange indexes. But also the downgrading of the US rating, the lowering of Italy's credit worthiness, the continuing problems in Portugal, strikes in Spain, as well as increasing worries about the division of the Eurozone...  all of this has cast a gloom over the global economy - and considerably so in Poland. Even the forecasted large amounts of extra cash staying in US financial circulation by the FED only improved investors' moods for a short while. The nervous stock exchanges were even affected by the sex-scandal involving the head of the IMF, Dominique Strauss-Kahn. And it was no good looking for optimism as far as China was concerned, where the local central bank is now trying to cool its economy down. In Warsaw, buyers also found themselves on the defensive, and the WIG 20, instead of attacking the 3,000-point barrier, instead slumped and ended up defending the level of 2,800 points. The amended act on open-ended pension funds then came into force, limiting the possibilities for pension funds to buy shares. Furthermore, the state of public finances continues to worry investors, and the unexpected increase in interest rates by the Monetary Policy Council did little to improve the mood of stock exchange players. As a result, the WIG lost 2 pct and the WIG 20 nearly 2.6 pct, and this took place during the still ongoing results-publishing season, which, particularly in the case of big companies, is usually a much happier time of the year. Unfortunately, the construction sector's streak of bad luck continues, as their index fell for the fifth consecutive month. This time, in the period covered the WIG-BUD lost as much as 10 pct. Even though the revenues of the sector are growing, as reflected in the results for Q1, there is no use looking for the kind of profits enjoyed even twelve months ago. Company results have been hurt by the situation in the road construction industry - for the last two years, on the wave of the preparations for Euro 2012, road contracts were being carried out below their cost estimate value. On the other hand, the announced axing of funds earmarked for the construction of roads is not helping to generate optimism about the future. Construction companies are waiting for the energy projects segment of their sector to develop, but according to specialists they will have to wait for quite some time. Shares in Erbud and ABM Solid have considerably lost value. Both companies registered losses in Q1 - PLN 14.4 mln and PLN 9.9 mln respectively. However, there was clear growth in revenue in both cases, by 50 pct and 70 pct. However, representatives of ABM Solid insist that this is going to be its last weak quarter. Meanwhile, Erbud executives believe that since the margins in the road construction industry are finally looking positive and due to the improving results of the development sector, the industry is now on the right track. Construction giant PBG suffered its lowest share price since its debut on Warsaw Stock Exchange. Analysts were alarmed by the fact that the president of PBG compared its takeover of Hydrobudowa to that of Pol-Aqua by Spanish company Dragados, among other things. In the light of the negative climate around the construction sector, even the share price of the analysts' favourite - Budimex - went down. Only four companies maintained their value in the period covered.  It is no surprise then that the debut of retail facility constructor PBO Anioła was very weak. Its share price slumped 22 pct on its debut. The developers' index, which registered a drop of "only" 5 pct, was clearly doing better than its construction counterpart, even though it was still relatively weak compared to the indexes of the broader market. This might be a little surprising, because both the sales results for homes and the investment plans for the rest of the year look promising. Moreover, after a weak winter, the mortgage market has also livened up. (Mir)

Bearish moods in Prague and Budapest
As usual, movements on Prague's trading floor were minimal. The PX index registered a slight drop of 0.5 pct. The Budapest BUX index fell much deeper, losing 6.95 pct. This is the result of the stronger connections of the bigger and more liquid stock exchange in Budapest compared to the peripheral trading floor in Prague, as the factors affecting both markets clearly had a global character, manifesting themselves mainly by waves of increased aversion to risk. The biggest companies publishing their results included OTP Bank (a 12 pct fall of profit as a result of the introduction of a bank tax) and MOL, which increased its profits fourfold, mainly thanks to higher oil prices.