Why we believe the Polish stock market is ready for a re-valuation

Published 15/06/2020

  1. Over the last 10 years, the broad Polish WIG index has only increased by 22.4% vs. 74.2% for the Hungarian BUX and 80.7% for the Romanian BET stock index.
  2. BUT: Between 1989 and 2018, the Polish GDP exhibited the fastest growth by far of all European nations (+827% vs. for example +783.8% for Slovakia and +549.5% for the Czech Republic) and as the only one in Europe Poland did not slip into recession in 2008-2009.
  3. The reference rate of the Polish central bank NBP has recently been lowered to an all-time low of 0.1% (in CEE, only Hungary has a lower interest rate of 0.05%). At the same time, NBP launched the first Polish QE program worth an estimated EUR 15-20bn (Romanian and Hungarian central banks have also started buying government bonds due to the COVID-19 crisis).
  4. Poles‘ bank deposits and cash reached a record value of PLN 1.13tr/EUR 260bn at the end of 2019. Due to extremely low interest rates and a relatively high inflation of 2.9% (data from 01/05/2020) this money will likely be invested in more risky/profitable assets such as stocks in the near future.
  5. The Employee Capital Plans (PPK), the new pension scheme that was launched in 2019, have already accumulated PLN 610m/EUR 150m, most of which have to be invested on the Warsaw Stock Exchange.

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