Barrier broken
So the next barrier on the Warsaw stock market has been broken and the WIG index has fallen below 1,100 points. It started the year off at 1,794.6 points.
Yesterday the markets tumbled with the WIG20 down 3.5 percent to 1,084 points and the WIG down three percent to 12,129 points. It is clear what the problem is and it is only a few hundred metres from the stock market. The government has lost any control it might have had on its budget and investors fully understand this. Get out and save what you can seems to be the order of the day. In these circumstances and with foreign markets also not at their best, the only trend foreseeable is down.
To make matters worse the clear need for state borrowing and the effect it has on inflation is unlikely to push the monetary policy council (RPP) to permit reductions in the basic interest rate. High interest rates however encourage bond investments at the expense of shares.
Yesterday both TPSA and Pekao S.A. fell by more than six percent. TPSA fell because of rumours that France Telecom had offered PLN20 per share pushing the price up and traders quickly took their profit before the situation deteriorated again. Deteriorate it did.