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The Warsaw Voice » Business » March 29, 2012
Business & Economy
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We Expect the Market to Grow
March 29, 2012   
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Andrzej Tabor, member of the board at Erste Securities Polska S.A., talks to Andrzej Ratajczyk.

Recently, several international financial institutions have revised upwards their GDP growth projections for Poland. But Erste Group analysts do not share this optimism and have revised their growth forecast for Poland downwards. Why?
This forecast was not prepared by Erste Securities, so it is hard for me to comment on the specific reasons for reducing the forecast for Poland. According to the commentary by Erste Group analysts, the reduction of the GDP forecast (to 2.4 % growth) is based on worsening of external conditions, mostly poorer growth prospects for the EMU (and Germany) which, combined with domestic fiscal consolidation (the impact of some reforms on consumer sentiment and spending decisions) will impact the Polish economy negatively. Erste Group analysts will closely follow the developments in the EMU and, in particular, Germany, which is a key external factor for Poland. If there are clear signals that the situation is evolving in a much better way than currently anticipated (sufficient to trigger an upside revision for the EMU and Germany) they will, naturally, revise the forecast for Poland.

The downward revision of the forecast does not change the fact that Poland will still have one of the fastest-growing economies in Europe this year. Does the strong performance of the real economy help increase interest from foreign investors and issuers in the Polish capital market?
Of course. The Polish WSE has grown into a regional leader and enjoys a good level of trust on the part of both listed companies and investors. The reason why issuers choose to be listed on the WSE is that investment funds active on the market generate high volumes and hence liquidity is not an issue here. On the other hand, funds flow into Poland because of new issuers. These are combined vessels. As a result, the WSE continues to enjoy an upward trend, contrary to the Vienna Stock Exchange, which has not even benefited from the acquisitions of neighboring stock exchanges.

What is behind the WSE’s success?
Creating sound and solid foundations, especially regarding regulations and corporate governance, played a great role. Foreign funds are interested in trading on the Polish exchange in view of the comfort they are experiencing as regards the quality of service and legislation. The WSE also offers some sense of security, which other markets cannot. A factor stabilizing against sudden drops is the presence of Open Pension Funds. They do not sell out during recession, as they have no redemptions like investment funds. Secondly, Polish funds hire truly top-level managers.

Most of the foreign issuers on the WSE are companies from our region, mainly from Ukraine. Is it possible to attract more large foreign companies to the Warsaw floor?
There are a few large companies from the region that we would gladly see listed on the WSE. In my opinion at least some of them will enter Poland sooner or later. Some selected London or New York and now feel disappointed. They are marginal companies with a weak position on the market. Here, they would be giants.

What is the latest recommendation of Erste Securities for Poland?
We recommend “moderate overweight.” Current valuations are favorable for the Polish market. I think that Polish investment funds are still underinvested and Polish companies are underweight. Currently, everything seems to foreshadow a second wave of market growth.

And which sectors now seem to be especially attractive to investors?
It is worth paying close attention to banks. IT distribution companies may also be attractive. In the long term, companies engaged in the extraction and exploitation of shale gas may become the driving force of the Polish economy and the capital market, as Poland seems to have large deposits of this natural resource.
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