WSE indices dive for the fourth consecutive day

14-01-2008, 21:20

Warsaw (Puls Biznesu) – Warsaw indices fall to even bigger lows. On Monday, they were decreasing for the fourth consecutive day.

The WIG20 index was losing 3 percent during the day. Small and mid-caps were doing even worse. sWIG80 was diving even 5 percent . In the afternoon, however, investors calmed down. Indices managed to rebound and make up some of their Monday losses. It was thanks to US stock exchanges which started the day very well.

On Friday, the signals from the USA were negative. Dow Jones lost over 240 points, or nearly 2 percent. Merrill Lynch said in a report that recession had already started in the USA. Although, in definition, recession means two consecutive quarters with negative GDP growth, Merrill Lynch had several years ago forecast rightly the upcoming depreciation of the US dollar.

Unstable situation does not adversely affect developing markets, including Brazil, Russia, Turkey or China. Their indices trade just slightly lower. WSE should behave likewise because Polish economy develops as well. However, WSE indices are among the weakest ones. The reason may be investment funds. Many asset managers admit unofficially that they had not expected such a bad beginning of the year. More and more clients withdraw their money from funds, which in turn need to cut their portfolios.

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