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The Warsaw Stock Exchange and the Polish capital market can consider 2007 as the best year in their history. The reasons are: record-breaking trading in shares and derivatives, excellent condition of the primary market, new categories of instruments listed on the WSE, as well as launching of NewConnect – an alternative trading platform. The year 2007 is also marked by a number of initiatives undertaken by the WSE to create a new quality in communication on the capital market, such as the launch of www.WSEInfoSpace.eu and www.WSEInternational.eu portals.
WSE MAIN LIST
Listings
A record 81 companies debuted on the WSE Main List in 2007. The previous record, 62 listings, was set in 1997.
The value of this year’s IPOs was also record-breaking – in excess of PLN 18.2 bln (EUR 5.05 bln).
12 foreign companies debuted on the WSE this year. The total value of their IPOs exceeded PLN 13 bln (EUR 3.6 bln). 8 of these listings were conducted with new share issues. The Immoeast IPO, worth more than PLN 10.7 bln (EUR 3 bln), was the largest one, Orco Property Group came second with PLN 652 mln (EUR 181 mln) and Kernel Holding third at PLN 546 mln (EUR 152 Mln).
The WSE has welcomed companies from markets not yet represented on its trading floor i.e. Estonia, Italy, Spain and Sweden. A second Ukrainian firm – Kernel Holding – has listed this year on the WSE.
A total of 351 companies, including 23 foreign ones, were listed on the WSE Main List at the end of 2007.
Equity Trading
Equity trading reached historical highs in 2007, with total value exceeding PLN 482 bln (EUR 133.5 bln) – up by 40% compared to 2006, the previous record-breaking year. Single session turnover value has beaten its record highs twice in 2007 - on 18 January 2007 (PLN 3.706 bln; EUR 1.02 bln), beating the 10 November 2004 record (PLN 3.272 bln; EUR 0.9 bln), then on 21 December with trading volume exceeding PLN 4.141 bln (EUR 1.14 bln).
Market Capitalisation
WSE market capitalisation increased significantly in 2007, exceeding PLN 1 trillion for the first time at end of the year (PLN 1.08 trillion; EUR 300 bln). The capitalisation of domestic companies amounted to PLN 510 bln (EUR 142 bln) whereas foreign firms accounted for PLN 570 bln (EUR 158 bln).
Overall market capitalisation increased by PLN 440 bln (EUR 122 bln) relative to the end of 2007, with capitalisation of foreign companies tripling from PLN 198 bln (EUR 55 bln) to PLN 570 bln (EUR 158 bln).
The listing of UniCredit on 20 December 2007, market value PLN 270 bln (EUR 754 bln), had a significant influence on the overall increase in market capitalisation of foreign companies listed on the WSE.
Indices
New principles of calculating and qualifying companies to stock exchange indices were introduced after the session of 16 March. According to those rules, companies included in indices must have a min. 10% free float worth at least EUR 1 mln and cannot be subject to special circumstances (e.g. bankruptcy proceedings). Free float is the basis for calculating the participation of companies in all indices.
The MIDWIG index was replaced by mWIG40 and WIRR by sWIG80. WIG20, mWIG40 and sWIG80 index portfolios are calculated based on a single specification where the companies are arranged according to trading volumes and market value.
Warsaw is becoming a significant regional market for IPOs of real estate developers, a large industry with good growth perspectives, which is reflected by numerous past and planned listings of companies from this sector on the WSE. In an effort to provide investors with an analytical tool, the WSE has started to publish the WIG-developers segment index, showing the condition of this industry on the WSE. This sub-index presently includes 14 companies.
New Market Segmentation
As of 2 April, shares of all companies listed on the regulated market have been qualified into three segments: 5 PLUS, 50 PLUS and 250 PLUS.
The 5 PLUS segment includes companies with market capitalisation up to EUR 50 mln, the 50 PLUS segment those with market capitalisation between EUR 50 mln and EUR 250 mln. Those with capitalisation in excess of EUR 250 mln are included in the 250 PLUS segment. Such classification provides transparent identification of issuers listed on the WSE.
Qualification of newly listed companies to their respective segments takes place after their first trading day, based on their end-of-the-day market capitalisation.
Derivatives Market
Overall 2007 volume of trading in all derivative instruments reached almost PLN 10 mln, approx. 48% more than in 2006. Total value of trading reached almost PLN 661 bln (EUR 183 bln) - 75% higher than in 2006.
The average 2007 monthly volume of all derivatives transactions reached 256 240 contracts, up by 32% compared to the previous year. The number of average monthly orders for all derivatives reached 3 675 637, up by 46% relative to 2006.
WIG20 Futures:
Monthly WIG20 futures trading volume exceeded PLN 1 mln for the first time in August 2007. Total trading volume in WIG20 futures in 2007 was almost 51% higher than in 2006.
Equity Futures:
Equity futures trading volume reached a historical peak of 22 115 in November 2007. Overall trading volume in this market has passed the 100 000 contracts barrier in 2007.
Exchange Rate Futures:
The WSE has initiated a direct cooperation with an exchange rate futures market maker in November 2007. A significant increase in trading volume followed - a total of 1 250 contracts were traded in November and more than 1 800 in December.
Options:
Options trading volume increased by over 22% relative to 2006. The number of open interest at the end of 2007 was almost 142% higher than at the end of 2006.
Structured Products:
WSE contracted two structured products issuers in 2007, i.e. Erste Bank and Raiffeisen Centrobank (RCB). Products of 3 issuers are currently listed, i.e. Deutsche Bank London (structured bonds), Erste Bank and RCB (structured certificates) – 12 series of products in all, including products with foreign indices, share baskets and commodities (crude oil, gold) as the underlying instruments.
International Cooperation
On 16 May the WSE signed a memorandum of cooperation with PFTS, the largest Ukrainian stock exchange. This agreement ensures long-term cooperation between the two stock exchanges and should facilitate equity procurement and access to a wider group of investors.
On 12 October the WSE became a shareholder in the Sibex currency and derivatives exchange (Monetar Financiara si de Marfuri; Sibiu, Romania). WSE had subscribed for increased share capital of the Sibiu stock exchange and the Board of the Sibiu Exchange allocated to WSE shares constituting 1.8% of Sibex total share capital.
In 2007 the WSE also signed memoranda of cooperation with the Baku Stock Exchange and Vietnamese Ho Chi Minh Stock Exchange (HOSE).
International Conferences at the WSE
The first CEE Market Forum was held on 18-19 January. The purpose of the Forum is to create an information and experience interchange platform for investors and companies of Central and Eastern Europe. More than 40 Polish and foreign companies listed on the WSE, brokerage houses (including foreign WSE Members), WSE IPO Partners, representatives of stock exchanges from the region, investors, as well as Polish and foreign journalists participated in the meeting.
The CEE Business Forum was organized on 22-23 October for companies from Central and Eastern Europe interested in listing on the WSE. More than 40 representatives from companies of Ukraine, Belarus, the Czech Republic and Lithuania participated. The purpose of the CEE Business Forum is to present the Polish capital market, its principal institutions such as the Polish Financial Supervision Authority (KNF) responsible for supervising the market, the Warsaw Stock Exchange – its current condition and growth prospects – and the National Securities Depository (KDPW) responsible for transactions settlement.
The CEE Derivatives Forum held on 22-23 November is yet another international initiative undertaken by the WSE in 2007. Its main purpose is to establish a platform for interchange of information and experience related to the derivatives market in Central and Eastern Europe.
The International Companies Information Forum
The first International Companies Information Forum was held on 26 February. Its purpose is to acquaint foreign investors with companies listed on the WSE and stimulate trading in their shares.
Best Practices of WSE Listed Companies
On 4 July the WSE Supervisory Board adopted the new “Best Practices of WSE Listed Companies”. This new document will become effective as of 1 January 2008.
The purpose of the new “Best Practices of WSE Listed Companies” code is to improve transparency of listed companies, improve their communication with investors, strengthen protection of shareholder rights (including issues not regulated by applicable laws) without increasing burdens unjustified by requirements of the market.
New Communication Channels
The WSE introduced in 2007 a number of solutions facilitating access of investors to information and improving communication on the stock exchange market:
WSEInfoSpace is an information service launched in May in cooperation with the Polish Press Agency (PAP). This Internet site offers comprehensive and one-stop information about WSE listed companies.
The first web site entirely devoted to corporate governance issues of WSE listed companies.
A special web site, launched on 17 December, devoted to foreign companies listed on the WSE and allowing investors to learn more about these companies. The link is useful for all stock exchange investors, both domestic and foreign, individual as well as professional.
WSE Members
10 new WSE Members were admitted in 2007: 8 foreign (Societe Generale, France, BNP Paribas Arbitrage, France, Cashline Securities, Hungary, Nordnet Bank, Sweden, Cyrrus, Czech Republic, NeoNet Securities, Sweden, Hansapank, Estonia, DekaBank Girozentrale, Germany) and 2 from Poland (Opera Dom Maklerski and X-Trade Brokers Dom Maklerski).
Trading volume of WSE Remote Members has more than tripled compared to 2006. Total trading value generated by that group exceeded PLN 22 bln (EUR 6.09 bln), as opposed to just PLN 6.9 bln (EUR 1.9 bln) in 2006.
Investors
The WSE presented results of its latest research regarding the participation of individual investor groups in stock exchange trading and activity of Poles on the capital market. Relative to H2 2006, the poll confirmed stability in structure of investors on the cash market and increased share of institutional and foreign investors in trading on the futures and options markets.
Although investor structure remained quite stable, total trading value increased by 50%.
12.7 mln Poles hold shares through the Pension Funds. 955 000 accounts are open in brokerage houses, including 267 000 Internet accounts (43% more than at end of 2006).
The Trading System
The WSE improved the efficiency of its WARSET trading system in June by replacing the central computer and part of the system infrastructure. This complex project was aimed not only at raising security and technical infrastructure sophistication for market participants, but mostly at handling the growing activity, manifesting itself particularly through a dynamic increase in the number of orders placed per session. It was the most challenging and complex operation performed on the system since the beginning of its existence. All works associated with replacing the central WARSET computer and related projects were performed by the WSE.
Stock Exchange Fees
As of 1 April, all WSE transaction fees have been lowered by approx. 15%. In addition, the maximum fee for WSE Members’ cash market transactions was decreased by 12% (from PLN 1 000 to PLN 880), for orders performed. Thus, the maximum amount charged by the WSE for performing any order does not exceed PLN 880 (EUR 244), irrespectively of its size or value. Fees charged for transactions on index and share futures contracts were decreased by 15% and on bonds futures by 20%. The fees for option contracts were decreased by more than 16%.
The WSE and the National Depository for Securities have cancelled their fees for WSE Members’ trading in Exchange Rate Futures contracts, in the period from 1 October 2007 to 30 June 2008.
NEWCONNECT
Market Launch
NewConnect was launched on 30 August as a market organised and operated by the WSE for the purpose of financing development of young companies with high growth potential. NewConnect has a status of an organized market but is operated by the WSE outside the regulated market as an alternative trading platform.
Five companies have debuted on the first NewConnect trading session: Digital Avenue, S4E, ViaGuara, Virtual Vision and Wroc?awski Dom Maklerski.
Sessions on NewConnect were extended on 17 December, and its schedule is presently identical with that of the WSE Main List.
Listings
24 companies listed on NewConnect within just four months. The total value of their IPOs exceeded PLN 150 mln (EUR 42 mln). Companies and investors received a new opportunity to exchange shares through private placements. This possibility has been enthusiastically adopted by NewConnect issuers, as a majority of them opted for private placements.
LUG was the largest debut in terms of value, as its offer exceeded PLN 20.5 mln (EUR 5.7 mln). 5 other companies conducted IPOs worth in excess of PLN 5 mln (EUR 1.4 mln) each, i.e. Stark Development, Inwest Connect, Mera Schody, WDM and MW Trade.
NCIndex
There is a separate index calculated for the NewConnect market – NCIndex. Its reference date is 30 August 2007 and reference value (first index value) is 100. The NCIndex reached 144.17 at end of 2007.
Basic Market Data
Total trading volume exceeded PLN 303 mln (EUR 84 mln), and investors executed more than 58 000 transactions. Total market capitalisation of the 24 companies listed on NewConnect exceeded PLN 1.1 bln (EUR 300 mln) at the end of 2007.
Market Entities
NewConnect has 94 Authorized Advisers and 22 Market Members (brokerage houses).
An Authorized Adviser supports the company during preparations leading to its debut and cooperates with it for at least one year from its listing on NewConnect. Such a role is attributed to renowned, reliable investment companies, law offices, auditors and financial advisory companies.
Click here to view the key 2007 market statistics
