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Equity markets

WIG20 breaks out above 1600 points

Polish stocks started the new year with strong gains thanks to renewed buying of large cap companies. WIG20 blue chip index rose 2.7 percent on Friday, closing above 1600 points for the first time in more than two months, extending gains from last December's Santa Claus rally. Thinly traded market was pushed up by KGHM Polish Copper, up 6.9 percent to close at a new 52-week high of 28 zloty on higher copper prices. Other large cap stocks also gained ground, with PKN Orlen and Pekao rising 4 percent and 2.8 percent respectively. The index ended the day at 1616.79 points. Trading volume during Friday's session was relatively low, at 122 million zloty ($32.7 million).

Equity markets

Fund investors losing their tax advantage

At least some Poles who bought certificates issued by investment funds late last year are about to be disappointed by the loss of tax-free status of these instruments. Money management firms were selling publicly traded certificates for their funds, promising the investment will be exempted from Polish capital gains tax imposed by the government this year. However, at least one fund manager, DWS group was late in transferring newly issued certificates to KDPW clearing house. The fund may now lose its tax-free status. Another company, TFI Kredyt Banku has delayed registration of its new fund until after the New Year, turning tax-sheltered certificates into regular, taxable investment. TFI KB warned investors it won't be able to meet December 31 deadline.

Poles bought a total of 500 million zloty worth of tax-sheltered certificates, or one-tenth of the total offer. Several investment fund companies, including CA IB, Union Investment and Pioneer have called off their fund sales due to weak demand by their retail clients.

Pension funds

OFE Polsat no. 1 pension fund in 2003

OFE Polsat, the smallest of 21 Polish pension fund management firms, posted 16.8 percent returns in 2003, topping the latest industry ranking.

The worst performer, KBC group's OFE Kredyt Banku saw its pension fund units appreciate by 9.6 percent. On average, OFE funds gained a healthy 11.2 percent thanks to rising stock prices on the Warsaw bourse and a reversal of the decline in bond prices in late December.

FDI

Poland less competitive than Hungary

and Czech Republic, investors say

Foreign investors are complaining Poland is falling behind its neighbors in terms of competitiveness, says Michalis Michael, the head of Synovate market research group. If this situation persists, international investors are likely to switch their FDI flow from Poland to Hungary and the Czech Republic, which are said to be less corrupt, have better infrastructure and less bureaucracy.

Government agency PAIiIZ, set up to attract foreign direct investment into Poland estimates that foreign investments in Poland has declined to 5.5 billion dollars last year.

Equity markets

New public firms changing their dividend policy

Polish companies reevaluating their dividend policies after selling stock to the public. One, ATM Grupa TV producer has paid all of its earnings for 2002 as dividend to its founders to help them finance stock purchases in a recent IPO, at preferential prices. Clothing retailer Redan S.A. has a similar policy, restricting dividend payments of 0.82 zloty per share to its original shareholders. Another firm, Śnieżka paint factory whose stock went public in Warsaw on the last day of 2003, says it will continue its policy to pay out a quarter of net earnings as dividends to all shareholders.

Bond market

Retail bond prices stable thanks to rising demand

Finance Ministry hasn't changed yields on bonds offered to retail investors in January after raising its bond offer from 500 to 1500 million zloty due to higher than expected demand from local investors.