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The Warsaw Voice » Other » November 18, 2009
CEE Financial Hub Conference
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Aiming High
November 18, 2009   
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Ludwik Sobolewski, president of the Warsaw Stock Exchange, talks to the Voice's Andrzej Ratajczyk.

What is the role of the stock market in the Polish economy these days?
The Warsaw Stock Exchange (WSE) is an essential part of the capital market, both the primary and secondary market. For this reason it is also a very important element of Poland's financial system. The stock exchange performs its basic functions all the time: it supplies companies with capital, is involved in ownership changes, determines the value of companies, raises management standards and contributes greatly to promoting the issuer's brand. But I think the most important role of the stock exchange, especially in the context of the economic development of the country, is that it creates an important source- alongside other sources, for example banking loans-from where companies can draw capital for further development.

How does Poland's stock exchange compare to other European stock markets?
The Warsaw floor stands out compared to other European exchanges. The latest report from the Federation of European Securities Exchanges shows that we are invariably in first place in Central and Eastern Europe in terms of stock market capitalization and turnover. We have also kept a high position on the European IPO market. After the first three quarters of this year, the WSE is in second place in Europe, after Euronext, in terms of the number of IPOs and in third place after London and Luxembourg in terms of IPO value, according to the report IPO Watch Europe released by PriceWaterhouseCoopers. This year, by the beginning of November, nine companies debuted on the WSE's main market and 19 on the NewConnect market. In the Central and Eastern European region, the Warsaw exchange is the undisputed leader and continues to expand. On Sept. 30, we opened a new bond market, called Catalyst, which provides companies with a wider access to funding through debt instruments and makes it possible for investors to invest assets in instruments whose risk differs from that of equity instruments.

Does the WSE have a chance of becoming a regional financial hub in the coming years? What will it take for the plan to create a regional trading center consolidated around the Warsaw exchange to succeed?
The WSE's ambition is to become a regional financial hub and I am convinced we have a good chance of achieving this goal within a short time. Of course, solid economic growth is still the basis for the development of the Polish capital market.

There is every indication that Poland will be developing faster than the "old" European Union countries. As a result, Polish people's savings will be growing and part of the money will be flowing to the Warsaw floor through investment and pension funds. Combined with new issues, this should strengthen the Polish exchange.

We are pinning much hope on a new program for the privatization of Treasury-owned companies. The government plans to sell on the stock exchange companies operating in the energy and financial sectors, including the PZU insurer and BG¯ bank, and other important companies, for example the national air carrier PLL LOT. The new issue of PKO BP shares and the debut of the PGE energy group in early November alone will raise the WSE's capitalization by over 5 percent.

The large issues by state-owned companies have a chance of attracting foreign investors and strengthening our position in the region even further. We can say today that the WSE is already the largest stock exchange in the region in terms of the number of companies listed, capitalization and, since mid-2008, also turnover. We are also the most innovative and most complete market now after the projects like NewConnect and Catalyst have been carried out recently.

For many years foreign investors have generated a substantial part of turnover at the WSE and the number of foreign companies listed in Warsaw is growing. How important is foreign capital for the development of the Polish capital market? Will any measures be taken to attract back to Poland the foreign investors who withdrew from the Polish market in the wake of the global crisis?
The proportion of foreign investors accounted in 2008 for 46 percent of total turnover, which means foreign capital is of crucial importance for the Warsaw exchange. Unfortunately, in 2008 some investors lumped us into the same category as countries which were hit hard by the recent crisis. But now, the perception of Poland-the only "green" spot on the economic map of Europe in 2009-is quite different. The stock exchange is conducting an intensive education and canvassing campaign to attract new issuers and investors. We are also active on the international market.

We are canvassing for new WSE members and business partners. The 2009 Polish Equity Conference has already been held in New York to promote the Polish market among American institutional investors. This year, the conference, of which the WSE is a joint organizer, was held for the second time. We want it to become a regular event integrating participants in the Polish and American capital markets. In November, NewConnect will have its first foreign road show in the Czech Republic. More and more companies are thinking of entering the NewConnect market and the newly set up Catalyst bond market. Foreign companies are also interested in acquiring capital through the debt securities market.

WSE's goal is to see the largest possible number of companies operating in the region acquire capital through the Warsaw stock market. How does the WSE encourage foreign companies to choose the Warsaw floor?
We are constantly improving the WSE's regulations and trading technology. We are also expanding our services to make them more complete and, as a result, more attractive than other trading platforms. The WSE is preparing to play the role of a regional exchange. The National Depository for Securities has adopted the same strategy.

We are now working on a completely new project-to examine and monitor the intellectual capital of companies, which will enhance the attractiveness of the regulated market. We have wide-ranging contacts in CEE countries. We have a network of remote members and a network of WSE IPO Partners, who help foreign companies access information and make a debut on the Warsaw exchange. We also have an office representing the WSE in Ukraine. It has been successful recently in finding and encouraging Ukrainian companies to enter our floor.
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