Published: May 7, 2009
The Warsaw Stock Exchange is launching trading in municipal and corporate bonds, and is planning to introduce short-selling of stocks, pending legal approval.
Ludwik Sobolewski, president and CEO of the Warsaw Stock Exchange, says: “We plan to launch, in 2009, an exchange-regulated market in municipal and commercial bonds. Once established, the market will provide companies and municipalities with a new financing vehicle while investors will be offered a new asset class to further diversify their portfolios.”
WSE is also creating an exchange-regulated financing and secondary trading platform, NewConnect, for innovative companies with high growth potential. It is also adding structured certificates and bonds, with exposure to commodities, foreign indices and stocks among other areas, to its range of listed instruments.
Liquidity in equities trading is being increased with the introduction of short-selling (pending legal approval) and the exchange is also looking at ways of strengthening WSE-listed companies’ compliance with corporate governance rules.
Derivatives trading is also expected to remain a major growth area. “Last year was yet again a record-breaking one as trading volume in all derivatives increased 27% compared to the previous year,” says Sobolewski. “Our most popular instrument, the WIG20 futures contract, ranks among the most traded European main index futures contracts.”
Sobolewski is a firm believer that Poland’s currency concerns are the product of “overblown reports over the state of the country’s economy and its lumping in with certain neighbouring economies that have been particularly hard hit by the downturn.”
“The Polish economy is weathering the financial storm relatively well – our GDP growth rate is still positive and our financial sector is stable. Thus, I believe, that the value of the Polish currency has suffered more than the fundamentals would justify,” he says.
“The recent depreciation of the zloty was in major part the result of increasing aversion of foreign investors to economies in CEE. Following the reports of some rating institutions, investors believe the whole CEE region is on the verge of default and that our financial systems are bound to collapse.
“Market observers and analysts should apply more effort in differentiating economies in the region and refrain from putting them all into one bag,” he warns.
While admitting that IPO activity on the Warsaw bourse shrank substantially in 2008, Sobolewski points out that the exchange has maintained its leadership position in terms of the number of new listings and the value of offerings.
“I expect this year to be even more difficult than 2008. However, I believe that the WSE should maintain its strong position relative to other European exchanges. This year we have already had three new listings on the WSE main list (regulated market). There are currently 373 companies listed there including 25 from abroad.
“The Warsaw bourse is attractive for foreign issuers as it provides, among other things, the possibility to enter the region’s largest economy and to increase liquidity of existing shares through dual-listings across many exchanges.
“I believe that once confidence returns to the markets the WSE shall remain well positioned to compete for the top place among securities exchanges in the CEE region.”