The year 2023 was in many ways highlighted by changes in the political and economic sphere which had an impact on the reversal of the negative tendency from 2022, however, some states of affairs remained unchanged (in particular the geopolitical situation connected with the war in Ukraine, the shift in government and decisions of the Monetary Policy Council /RPP/)
In 2023 the capital market in Poland assumed a leadership position in Middle and Eastern Europe when it came to market capitalisation, the number of companies listed on the stock exchange and interests of foreign investors. Our stock market was one of the strongest platforms in Europe and this gave investors strong investment opportunities and a solid footing, however, making investments on the Polish market was still affected by high volatility. Positive tendencies on the Warsaw Stock Exchange Market (WSE) were also reflected in the strengthening of the Polish currency in comparison with other currencies.
Throughout 2023 the total amount of trading in shares on the main market of the WSE totalled 274.4 billion PLN which was approximately 4% lower than in 2022 (table 1). The entire capitalisation of domestic and foreign companies listed on the WSE reached the amount of 1 440 billion PLN (about 331 billion Euro). In 2023 the WIG index increased by over 36 % (its highest annual increase since 2009). In December 2023 prices of the shares of the companies on the WSE were growing over 3 months and the WIG index achieved a value of 79 465.55 point (maximal rate). This large increase resulted from improved sentiment on world stock markets and the rather low basis from which the Polish market began growing after a weak year in 2022. Over half of the raises from the previous year were established in the last quarter of 2023 also due to the positive reception of the outcome of the Parliamentary elections in October 2023 and positive tendencies on world markets. The market in the 4th quarter 2023 reported increses after a dip in August and September and this trend remained unchanged throughout the whole 4th quarter and as a consequence the WIG hit an all -time – high in 2023. In turn, the WIG20 index increased its value by 19.5% compared to other European indexes such as the French CAC40 (which rose by 8%) or the German DAX30 (which rose by 9.5%). Despite these increases it should be stressed that 2023 war rather weak on the IPO market.[1] 10 companies were enlisted on the main market of GPW and 9 of these companies moved their listing from NewConnect.[2] However, only one company MURAPOL, being one of the largest housing developers placed a public offer within the sale of shares belonging to the major shareholders, ARES trust.
Table 1. Activities of Investors on the Main Market of WSE in December 2023
Main Market -in Total | 2023 | 2022 | Change in % | Capitalization of Companies | 2023 | 2022 | Change in % |
Value of Trading (in PLN) | 274 474 802 | 285 641 631 | -3,9% | Domestic Companies | 371 | 371 | 0,0% |
Value of Trading | 9 725 814 490 | 12 336 429 842 | -21,2% | Foreign Companies | 42 | 44 | -4,5% |
Number
of transactions (book of orders) |
34 322 130 | 32 975 039 | 4,1% | Together | 413 | 415 | -0,5% |
Value of Trading – Block Trades (in thousand PLN)3 | 7 586 403 | 7 469 219 | 1,6% | Domestic Companies (in million PLN) | 760 213 | 574 669 | 32,3% |
Volume of Trading – Block Trades | 297 346 706 | 331 771 788 | -10,4% | Foreign Companies (in Million PLN) | 680 073 | 539 524 | 26,1% |
WIG at the end of the period | 78 459,91 | 57 462,68 | 36,5% | Together (million PLN) | 1 440 286,32 | 1 114 193,32 | 29,3% |
Source: own work based on : Grupa GPW trading in December 2023, PDF File , p. 1, [data of access : 22 January 2024].
In table 2 activities of investors on the NewConnect market were presented in 2023
Table 2. Activities of the Investors on the NewConnect Market in October 2023
Main Market –
in Total |
2023 | 2022 | Change in % | Capitalization
of Companies |
2023 | 2022 | Change in % |
Value of Trading – together (in thousand) | 2 177 185,94 | 2 497 435,92 | -12,8% | Domestic Companies | 355 | 375 | -5,3% |
Value of Trading | 2 473 691 954 | 2 533 680 862 | -2,4% | Foreign Companies | 4 | 4 | 0,0% |
Number of transactions (book of orders) | 1 576 521 | 1 687 120 | -6,6% | Together | 359 | 379 | -5,3% |
Value of Trading – (in thousand PLN)3 | 80 058 | 87 682 | -8,7% | Domestic Companies (in million PLN) | 12 732 | 14 395 | -11,6% |
Value of Trading – Block Trades | 15 302 236 | 33 809 143 | -54,7% | Foreign Companies (in million PLN) | 128 | 121 | 5,4% |
Together (in million PLN) | 12 859,82 | 14 516,70 | -11,4% |
Grupa GPW trading in December 2023, op. cit.
The value of non-treasury bonds listed on the Catalyst market reached approx. 100 billion PLN by the end of December 2023 against 93.8 billion PLN in the corresponding period of 2022/ Within table 3 activities of investors on the Catalyst market in 2023 are presented. Weaker however was the debt market on which the profitability of bonds with longer maturity dates and with shorter redemption dates led to a price reduction. Short – term bond funds noted an over average rate of return throughout the entirety of 2023. The completion of the raising of interest rates by the central bank in September 2023, monthly lasting stabilisation and growing expectations for price reductions all supported the increase of the prices for bonds with long – term maturities. The profitability of SP bonds dropped in 2023 from 6.8% to 5.2%. On the other hand, corporate bonds paid high coupons based on WIBOR and over the reference rate, margin. In addition, in this segment there was no insolvency cases announced despite the slowing down of the economy.
Table 3. Activities of Investors on the Debt Market Catalyst 2023
Catalyst4 | 2023 | 2022 | Change in % |
Value of Trading per session (in million PLN) | 5 704 | 7 907 | -27,9% |
Number of transaction per session | 123 631 | 143 525 | -13,9% |
Value of Trading within block trades (million PLN) | 179 | 184 | -2,8% |
Number of block trades | 74 | 126 | -41,3% |
Number of issuers | 125 | 130 | -3,8% |
Value of emissions (in million PLN) | 1 279 831 | 1 150 062 | 11,3% |
Number of debuts | 165 | 101 | 63,4% |
Source : own work based on Grupa GPW trading December 2023, op. cit.
The entire volume of financial derivates instruments in 2023 reached 14.7 million, approximately 6 % lower than in 2022. Despite this fall in value in 2023 the value of trading increased by 4% the same as the number and value of open positions. Within table 4 activities of investors on the market of derivates instruments in 2023 were presented.
Table 4. Activities of Investors on the Market of Derivates Instruments in October 2023
Derivates Instruments | 2023 | 2022 | Change in % |
Value of Trading – in total (in thousand PLN) | 380 139 612,26 | 365 400 756,23 | 4,0% |
Volume of Trading | 14 677 597 | 15 594 315 | -5,9% |
Number of transactions (book of orders) | 5 311 560 | 6 015 770 | -11,7% |
Number of open positions | 400 932 | 330 138 | 21,4% |
Value of open positions (in thousand PLN) | 5 220 084 | 3 368 160 | 55,0% |
Source : own work based on Grupa GPW trading December 2023, op. cit.
In 2023 a part of the assumptions of the Strategy for the Capital Market Development (SRRK) was accomplished and approved by the Council of Ministers on 1st October 2019. Some initiatives contained within the new strategy of WSE for 2023 – 2027 correspond with SRRK assumptions. Between 2023 and 2027 the WSE plans to generate revenue in the amount of 498 million PLN along with average annual EBITDA in the amount of 215 million PLN. Analysts see large potential in companies listed on the WSE in Warsaw. Table 5 shows selected companies with potential growth from 25% up to 76%.
Table 5. Companies with potential growth from 24% up to 82 % on WSE in Warsaw
Name of the Company | Closing Price from 10.11.2023 (in PLN) | Target Price(in PLN) | Potential target price return (in %) | Numberof positive recommendations | Number of purchase recommendation |
Tauron Polska Energia S.A. | 3,66 | 6,67 | 82 | 3 | 3 |
Pepco Group Ltd | 18,20 | 32,37 | 78 | 15 | 12 |
Enea S.A. | 6,92 | 12,21 | 76 | 4 | 4 |
PGE S.A. | 7,00 | 10,60 | 51 | 4 | 4 |
Eurocash S.A. | 15,30 | 21,58 | 41 | 6 | 3 |
Selvita S.A. | 59,30 | 83,18 | 40 | 3 | 2 |
Orlen S.A. | 62,16 | 84,23 | 36 | 6 | 4 |
Mo-BRUK S.A. | 284,00 | 366,28 | 29 | 5 | 4 |
Allegro.eu | 30,88 | 38,92 | 26 | 16 | 10 |
Benefit Systems S.A. | 1 700,00 | 2 172,00 | 28 | 4 | 4 |
Neuca S.A. | 720,00 | 898,33 | 25 | 3 | 3 |
Intercars S.A. | 560,00 | 695,40 | 24 | 5 | 3 |
Source, own work based on: https://strefainwestorow.pl/artykuly/spolki/20231113/12-spolek-gpw-rekomendacje-kupuj.
In practice, within the 4th quarter of 2023 two important decisions were taken. The first decision of the RPP concerning monetary policy and the second decision related to the Parliamentary election in October.
In September 2023 representatives of the RPP decided on the reduction of interest rates by 75 base points and this was backed by a three times lower movement in October 2023. This cumulative movement on interest rates was called finally by the RPP an “adaptation” and as of today the way to continue this course was closed. The next decision by the RPP in 2023 related to keeping interest rates at the unchanged level confirmed this policy. A majority of analysts expect the stabilisation of reference rates on the level of 5.75 % until the end of the first half year of 2024 and two cuts each of 25 base points in the second half of 2024 (thus only slight changes of the interest rates are expected due to inflation). Throughout the entire year of 2023 inflation dropped significantly and the industrial PMI index was affected by this drop as well. At the end of 2023 the PMI Index returned to the region of 48 points (by the halfway point of the year there were 43 points) and very close to the level limit of 50 points. The negative effects still remain; the negative dynamic of industrial production, slowing down of the German economy and the war in Ukraine.
The change of the government in the Polish Parliamentary elections was aimed at the improvement of the sentiment to our capital market. Within the post-election period (after 15th October) share prices started to gain value and the national currency significantly strengthened. The market also valued the potential improvement of our relationship within the EU and the possibility to obtain funds from KPO (National Reconstruction Plan). The first funds from KPO were transferred in the amount of 5 billion Euros and ultimately 60 billion Euros are expected to be provided in the future. These means will contribute to the economy, companies and local authorities and can also have an impact on the capital market. The change of power in the government also shows the necessity of meeting pre-election (expensive) promises. The high deficit shall increase by almost 20 billion PLN (up to 184 billion PLN). The borrowing net needs shall also raise by approximately 25 billion PLN up to 252 billion and this will result in higher debt issuances. Equally important is also the improvement of our market outside of Poland to increase demand for domestic debt. The share of non-residents in the structure of Polish debt was rather small and the financing of such high deficit will require significant back up from abroad.
The Polish Business Centre Club has presented the following proposals for developing the WSE and the increase of their investment attractiveness:
- Fast development of the genuine market of IPO;
- Support for domestic brokers and investment funds
- Intensification of cooperation with international capital markets,
- Restoration of the credibility among international institutional investors
- Changes to legislation aiming at the promotion of capital investments,
- Acceptance of REIT (Real Estate Investment Trust) for real estate funds,
- Seeking for potential international issuers
- Possibilities of energetic transformations
- Attractive taxation on the capital market
- Building of ecosystem for global investors
To sum up, the new year 2024 announces the continuation of positive trends on the WSE. The new government also promises to improve the relationship with the EU and funds from KPO will be gradually released in response. A rather lower appraisal of shares compared with development markets will surely contribute to the achievement of higher levels of main indexes. The exceeding of 80 000 points on the WIG is likely. The continuation of upward trends on the WSE in the upcoming sessions is possible by the end of the year and the beginning of January are rather favourable for investors (the so called January effect) [3] Within the segment of government debt a stabilisation is expected as the forecast for a slow reduction in interest rates and relatively high inflation at the end of 2024 could further hamper an increase of bond prices.
[1] IPO (Initial Public Offering)
[2] NewConnect is a stock market based on the Alternative Trading System (ASO) operated by WSE
[3]January effect means the period in which share prices are rising