Activities of the Bank

Capital market

516,8in PLN billion
value of WSE-
listed Polish companies
- 12,6% YoY

Stock market (WSE main market and ASO New Connect market)

The year 2015 saw a drop in key indices of the Warsaw Stock Exchange (WIG and WIG20) and for WIG20 it was the third year of decline. For the first time since 2009 the index breached the psychological threshold of 2000 points. The beginning of the year in world stock exchanges was optimistic, as the market expected, and then the purchase of treasury bonds was started by the European Central Bank at oil prices which were the lowest since 2009. The global optimism was also driven by the increase in crude oil prices resulting from advantageous demand projections and disruptions in the production and export of crude oil from Libya and Iraq. In May the market expectations concerning stabilization of the crude oil market were high. Due to the positive global risk-on sentiments, the Shanghai Composite Index rose by 60% from the beginning of the year to June 2015 to reach the record high level in the last seven years. The market started to suspect that the SCI growth was a bubble deemed to burst in near future. In May the upward trend reversed in the stock exchanges of developed counties, to be followed by the Warsaw stock exchange. In June the stock price fall was deepened by the correction in the Chinese market. Moreover, European markets, including the Polish one were additionally affected by the approaching term of repayment of Greece’s liabilities to the International Monetary Fund and yet another failure in the government’s negotiations with its creditors. Following a global risk aversion, the global indices were falling for six months, with the drops sharpened by a number of worrying news from China, including the August devaluation of the Chinese yuan, which started in June with the slump in the commodity markets. This, in turn, resulted from a threat of a lower Chinese demand, projections of considerable oversupply and information on the possibility of exporting Iranian crude oil. Apart from risk-off sentiments, the Warsaw Stock Exchange was affected by the elections in Poland, projected taxes on selected financial institutions and large-format stores and planned engagement of energy companies in rescuing the mining sector. The Polish stock market was also adversely affected by the consequences of the reform of Polish open pension funds, which dramatically reduced the role of the funds as investors and the decreasing investing activity. Finally, in 2015, the large-cap index, WIG20, dropped by 19.72% and WIG decreased by approx. 9.62%. In 2015, seven out of eleven sub-indexes increased. WIG-Chemistry sub-index saw the biggest growth (by 44.58%), while WIG-Commodities lost the most (-43.79%).At the end of December 2015 the value of Polish firms listed at the Warsaw Stock Exchange reached PLN 516.8 billion and was by 12.6% lower than in December 2014. In 2014 companies chose the capital market as the source of financing growth more often than a year before. During 2015, 30 companies debuted with the Stock Exchange, as compared to 28 IPOs in 2014.

The activity of investors decreased. In 2015 shares worth PLN 203.5 billion changed hands as a result of session transactions, i.e. by 12.6% more than in the previous year.

As announced in September 2014, at the beginning of the year the Warsaw Stock Exchange introduced changes in key indices. The WSE still quotes WIG30, while indices based on WIG30, i.e. WIG30short and WIG30lev, are no longer quoted. At the same time, sWIG80 is quoted again, while WIG50 and WIG250 are not listed. The changes in indices also affect the derivative market. The WSE focuses on developing the derivative market and promoting indices based on WIG20. Moreover, the WSE has been certified by the U.S. Commodity Futures Trading Commission, which allows it to offer WIG20 futures contracts to investors in the U.S. In June 2015 the WSE and KDPW_CCP announced to introduce a promotion, which assumes a temporary waiver of transactional and settlement fees on trading in SMEs’ stock carried out by market makers at the WSE and NewConnect. The promotion covered all stock except for WIG20 companies and lasted from 1 July to 31 December 2015. On 30 April 2015 the Management Board of the WSE informed that the Polish Financial Supervision Authority approved the changes to the Regulations of the WSE implemented by Resolution No. 5/1392/2015 of the Council of the WSE dated 26 February 2015. The changes result from adjusting the regulations of the WSE to the provisions of the Act amending the act on trading in financial instruments and certain other acts dated 5 December 2014. The Act cancels the provisions which obligated the WSE to provide additional detailed regulations concerning short sale. The changes entered into force as of 31 May 2015 and apply starting from the trading session of 1 June 2015. Since 13 August 2015 five new Turbo certificates have been available on the WSE, with the price depending on the value of NASDAQ-100 index. The certificates are issued by ING NV with the registered office in Amsterdam.

In 2015 total capitalization of companies decreased (5.0% YoY), while the value of offers grew (40.0% YoY) on the alternative market. In 2015, NewConnect saw 19 IPOs, and 13 companies (the biggest number in the history of this market) moved to the WSE Main Market. This affected among others the number of companies on the alternative market: at the end of 2015, 418 companies were listed compared to 431 at the end of 2014.

Bonds market (Catalyst)

The Catalyst market also saw an increase in the quoted stock issues. At the end of December 2015, the value of debt securities of 192 issuers traded on the Catalyst market reached PLN 613.1 billion, while at the end of 2014, debt securities of 193 issuers reached PLN 544.6 billion. In 2015, the value of corporate bonds issued with Catalyst reached PLN 66.4 billion, while the value of municipality bonds reached PLN 3.2 billion, and of the State Treasury Bonds PLN 543.6 billion. In 2014, the value of each instrument type issue reached PLN 60.9 billion, PLN 3.2 billion and PLN 480.5 billion, respectively.

In 2015 the number of IPOs on the Catalyst market reached 147, while the number of new issuers amounted to 23 versus 191 and 53, respectively in the previous year. The highest number of issues among debuting entities (expressed as the total value of bonds included in the motion) reached EUR 1.75 billion vs. EUR 500 million in 2014.

Significant decrease in stock exchange indices observed in the second half of the year was not accompanied with the balancing increase in bond prices. During the 12 months of 2015 the profitable TBSP.Index (Treasury BondSpot Poland) grew by 1.68% as compared to a 9.45% growth in 2014. This resulted from the reform of open pension funds in 2014, which did not allow open pension funds buy treasury securities; higher yield on benchmark German securities in spring and summer, despite the QE program carried out by the European Central Bank; and investors’ skepticism for fiscal projects of the new government.

Investment funds’ net assets

The first half of 2015 was advantageous for investment funds due to the global bull market. In the following six months of fluctuation in the stock market and the debt market, the volume of assets of Polish investment fund companies dropped gradually (with one market rebound of 3.9% MoM in September, which resulted from a very high payment to non-public funds). In 2015 the growth rate of Polish investment fund assets amounted to 21% as compared to 10.4% in 2014. The increase was possible thanks to contributions made to funds of non-public assets in December (a 41.9% MoM increase in the category)[1].

[1] Investment fund`s assets, monthly elaborations, mutual reports of Online Analysis and the Chamber of Management of Funds and Assets