Skarbiec TFI: Markets hope autumn elections and KPO will attract foreign money to the WSE
According to financial markets, the opposition's victory in the autumn elections and the expected inflow of funds from the National Reconstruction Plan (KPO) could attract foreigners to the Stock Exchange. According to domestic investors, this would give a boost to increases on the Warsaw Stock Exchange, reported Skarbiec TFI chief strategist Grzegorz Zatryb.
"We have our own 'turning points' on the WSE. These are, of course, the developments in Ukraine, the issue of EU funds from the NIP and, finally, the parliamentary elections. The most important is the latter act, but given the timing of the elections, it will have less of an impact for most of the year, unless the polls indicate a large enough lead for any of the competitors that the market can begin to discount the outcome. In contrast, the unlocking of funds from the KPO is taken almost for granted," Zatryb wrote in an analysis of the market outlook for 2023.
He noted that a calming of the situation in Ukraine is considered a baseline scenario, and this is a common view in global markets as well. In Treasury's view, this view is incorrect. However, the market gets used to all kinds of calamities quite quickly and the failure to end the war should not significantly affect the quotes.
"As a positive, the market sees the victory of the current opposition in the autumn elections. The impetus for increases may also come from KPO funds, although these will physically appear many months after an agreement with Brussels is reached. Both of these events should increase foreign investors' interest in our market; domestic investors are counting heavily on capital inflows to spur increases. In such a situation, the first beneficiaries will be large, liquid companies in which foreigners will invest. Small and medium-sized companies, on the other hand, will probably benefit in the second stage, when money from EU programs will flow to them. It is worth adding that if the economic situation turns out to be better than expected, 'bears' will be more in demand than 'blue chips'," wrote the chief strategist.
Zatryb pointed out that stock markets face a number of question marks. The first concerns the geopolitical factor - the war in Ukraine, which introduces an element of uncertainty that is difficult to quantify. The second relates to the economic situation (and the attitude of central banks) - according to him, until the extent of the downturn is reasonably certain, the coming slowdown will weigh on equity markets. The third factor is concern about significant revisions to corporate earnings; this is primarily true for the U.S. market, but given its importance, earnings forecasts will have global significance.
"It seems that the formation of some kind of trend will be possible only after the most important unknowns have clarified, or at least the market has a strong conviction of how things will develop. If the positive scenario plays out, new capital will enter the markets. Which group of stocks will it choose? Today, the macroeconomic environment is supportive of value companies, which have shown their merit in difficult conditions. However, this success has had a cost. These companies have simply become expensive. When the 'sum of all fears' is realized and the atmosphere clears, the markets will begin to see growth companies again," stated the chief strategist.
Skarbiec Holding is a group whose business is the management of investment funds (open-ended investment funds, specialized open-ended investment funds, closed-ended investment funds) and management services for portfolios of financial instruments on a commission basis. Skarbiec Holding S.A. is the sole shareholder of Skarbiec TFI S.A., which was established in 1997 as the fifth investment fund company in Poland and is one of the largest companies independent of any banking and financial group in Poland.
Source: Skarbiec TFI and ISBNews
