The Warsaw Stock Exchange steadily strengthens its position in the region of Central and Eastern Europe. The WSE is the region’s unchallenged leader by the number of listed companies, the number of IPOs, and the derivative instruments market. The capitalisation gap between the WSE and the Wiener Boerse, considered to be the WSE’s main competitor, is gradually shrinking.
The Warsaw Stock Exchange competes against the other markets in the region and attracts a growing number of foreign issuers. The WSE had only one foreign listing in 2003 and now has 25. The number of foreign listings on the Wiener Boerse fell from 21 to 18 within that period.
Figure 1. Number of Foreign Listings on the WSE and the Wiener Boerse
Source: FESE
The increasing number of foreign listings is a result of the pursued development strategy of the Warsaw Stock Exchange which is growing to become the main market in the region. Good access to capital, a stable and diverse investor base including foreign investors, lower listing cost and effective promotion of the WSE on international markets stimulate the interest of Polish and foreign issuers looking to raise equity. The WSE was Europe’s second exchange in terms of the number of IPOs (regulated markets) in 2007, second only to the London Stock Exchange.
Notwithstanding the bearish sentiment on the global stock markets, issuers are still willing to join the WSE. The WSE Main Market has had 22 new listings year to date (including 3 foreign listings) and their offerings totalled over PLN 7 billion. The Warsaw alternative market NewConnect is growing as dynamically: it has had 33 new listings year to date and the value of their offerings exceeded PLN 120 million (almost all in new issues raising capital for company growth).
In terms of capitalisation, or the value of listed companies, the Warsaw Stock Exchange is almost three times bigger than the Prague Stock Exchange and more than four times bigger than the Budapest Stock Exchange. While the Wiener Boerse capitalisation was over EUR 27 billion higher than the WSE capitalisation at the end of 2005, the gap shrank to EUR 12 billion by the beginning of 2008 and only EUR 8 billion at the end of May 2008. These figures cover the capitalisation of local companies on both markets; the capitalisation of foreign companies is twice as high in Warsaw as it is in Vienna.
Figure 2. Capitalisation of the WSE and the Wiener Boerse (EUR M) – Local Companies
Source: FESE
The dynamic growth of the number of WSE listings and the expected large privatisation projects including energy companies and chemical plants will help to further grow the capitalisation of the Warsaw Stock Exchange.
The WSE will continue to pursue the strategy of attracting new issuers, including foreign issuers, and strengthening its position in the region. Working in this direction, the WSE is the first foreign exchange to open a Representative Office in Kiev. In the near future, the Ukrainian market will be one of the most dynamically growing capital markets in Europe as local companies will be looking to raise more capital. The standing presence of the WSE in Ukraine will bring the Polish market closer to Ukrainian issuers and investors and direct their interest in equity issues to the WSE. The WSE currently has two listings from Ukraine, and another three companies consider joining the WSE.
A growing group of investors is interested in the Warsaw market. This is demonstrated among others by the rising number of exchange members, including the dynamically growing number of foreign investment companies which become WSE members. There are currently 19 foreign members, including Goldman Sachs, one of the largest investment banks globally which has recently become a WSE member. The value of the turnover of foreign brokers is also growing. They generated around 5 percent of trading in stocks on the WSE at the end of May 2007 and as much as 10 percent at the end of May 2008.