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The Warsaw Voice » Other » May 28, 2008
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Premises for the Warsaw Stock Exchange Becoming a Regional Financial Hub
May 28, 2008   
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Poland's accession to the European Union saw the start of a new chapter in the history of the Polish capital market. The economic freedoms which form the basis of the EU's internal market and above all the free flow of capital have opened up new prospects for securities markets in Europe, including the Polish market.

The concept of passporting has contributed to dynamic growth on the Polish market. Public offerings have been carried out in Poland by a range of foreign companies such as Astarta, Amrest, and Cinema City. We have also seen the debut on the Warsaw Stock Exchange (WSE) of several world industry leaders with considerable capital like Bank Austria Creditanstalt/CA IB (2003), the Hungarian MOL (2004), the Czech company CEZ (2006), and the Italian Unicredit (2008)-all on a dual listing basis.

A growing number of international corporations are offering their shares on the capital market in Poland, one example being New World Resources, industry leader in the field of hard coal in Central Europe. That this company chose to be listed on the WSE bears testimony to the fact that foreign companies and investors increasingly consider Poland to be an attractive market.

Foreign investors, encouraged by Poland's development prospects, account for approximately 35 percent of investor turnover on the WSE. Forecasts say growth will be considerably more dynamic than on the largest European markets.

What steps can be taken though, in this era of ever greater globalization and competition, to prevent interest in the Warsaw market waning?

One key aspect is the privatization of the WSE; it must be carried out properly. The best solution would be for the State Treasury to sell the majority of the shares in the Warsaw Stock Exchange, for example to a large European exchange such as Euronext or the London Stock Exchange. The WSE would then become a representative of one of these exchanges in this part of Europe. This in turn would mean that companies from countries in the region-including Russia, Ukraine, Hungary, and the Baltic states-have an alternative in Central and Eastern Europe.

Other factors that would have an impact on the WSE's functioning are: the attractiveness of public offerings planned in Poland, and further harmonization with the regulations of European capital markets.

Despite the current crisis on the primary market, the success of public offerings, depending to a great extent on the interest of foreign financial institutions, does not appear to be under threat. Large public offerings of state-owned enterprises, first and foremost power companies (Enea, Tauron, and PGE), and the anticipated PZU offering, will meet foreign investors' expectations.

Privatization, new public offerings, dynamic growth on the NewConnect unregulated market, and globalization, all point to the WSE being well on the way to becoming the financial hub of this part of Europe, leading to heightened economic prestige for Poland and a greater role for the WSE as a securities exchange in Europe.

Paweł Halwa, attorney-at-law and partner at Domański Zakrzewski Palinka
Mateusz Bednarz, Domański Zakrzewski Palinka
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