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The Warsaw Voice » Business » February 6, 2008
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Pension Funds Lick Wounds
February 6, 2008 By A.R.    
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Last year was the worst year yet for Poland's pension funds, according to analysts from an open-ended fund run by ING Nationale-Nederlanden. The annual rate of return for ING Nationale-Nederlanden Polska Otwarty Fundusz Emerytalny (ING N-N OFE) was just 5.5 percent at the end of 2007, down from 16.53 percent in 2006 and 16.9 percent in 2005.

Until mid-year, the Warsaw Stock Exchange was bullish, but then small and medium-sized enterprises began losing value in the second half of the year, with November bringing a further drop in share prices, said ING N-N OFE Vice-President Grzegorz Chłopek. This year, the Polish stock market is likely to vary substantially, Chłopek said, "with a worse first half and better second half of the year."

"At present, any bad news reaching the market is resulting in an immediate downswing in investor mood," Chłopek said. "In the long term, though, shares will be an attractive investment. There are especially good prospects this year for sectors such as banking, construction, retail and services as well as IT-if public orders get off the ground."

The greatest danger to the bond market, meanwhile, is growing inflation, ING N-N OFE says. Its analysts expect bond yields to continue in the single digits this year. According to Chłopek, the first half of the year is likely to bring two or three more interest rate increases, and there is little hope that monetary policy will be eased in the latter part of the year.

Despite the downswing, ING N-N OFE gained 190,500 new members in 2007, bringing its total membership to 1.12 million, Chłopek said. "We expect the same kind of growth this year," he added.
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