The Warsaw stock market fell yesterday, the WIG lost 0.1 percent to fall to 13,928 points whilst the WIG20 lost 0.7 percent to fall to 1,215 points. Other European markets fared similarly, the FTSE was down 0.5 percent, CAC40 0.3 percent and the DAX one percent.
However the case of Warsaw was somewhat exceptional as it centred around one company, Elektrim. A company that aims to be a power group and recently sold its telecommunications assets was only three years ago a major industrial powerhouse with many interests from cable manufacturing to yoghurt production. It recently has gone down a road of working in a similar fashion to a venture capital fund, only it is somewhat cash starved, so perhaps venture debt fund may be a better description. Yesterday Elektrim accounted for PLN66m of turnover whereas the usually highest traded stock, that of TPSA, only managed PLN12.2m. The question is now if the company can meet its obligations, it claims that it has half of that needed to redeem bonds but many traders seem to think that it may be heading for bankruptcy and its shares fell to a new all time low of PLN8.60. Many analysts such as those at CS First Boston, ING Barings and DM BOS have recommended cutting and running. And that is what traders are doing.