May 25, 2022

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The conflict in Ukraine.  Experts draw scenarios for companies from the Warsaw Stock Exchange

The conflict in Ukraine. Experts draw scenarios for companies from the Warsaw Stock Exchange

Players on the Vistula Stock Exchange can directly trade in shares of nearly ten Ukrainian companies. The Warsaw Stock Exchange has been a window into the world for big companies for many years Such as: Kernel, Industrial Milk Company (IMC), Astarta, Ovostar and Agroton. Now their business can be valued at more than 7 billion PLN.

This is a large amount, although it is clearly smaller than it was a few months ago. From October, the WIG-Ukraine index (shares of groups of companies from this country) decreased by about 30 percent. The main reason is precisely concerns about the consequences of the conflict between Ukraine and Russia.

It should be noted, however, that the WIG-Ukraine index rose significantly on Tuesday. At noon, they were up about 10 percent, and in the case of some companies, stock prices were up more than ten percent compared to Monday. This indicates that among the stock market investors There is a growing belief that we will avoid the worst.

Experts evaluate the behavior of the stock exchange

– Apart from one company included in the WIG-Ukraine index, all other companies carry out their main activity in Ukraine and represent the widely understood agricultural sector. so we have Two factors driving the high volatility of stock prices – Points out in an interview with the money Łukasz Wardyn, CMC Markets Analyst.

The expert admits it Since December, fear has prevailed and the shares of these companies have been sold off. There is also a distinctly different approach of Polish investors towards Ukrainian companies compared to local ones, where declines have not gained such pace.

Investors are now pricing in an increase in risk, rather The base scenario isn’t a complete conquest yet – Dr. Thomas Bursa, Vice President of OPTI TFI is assessing the situation.

In an interview with the money He notes that the WIG-Ukraine index has fallen by 15-20 percent. From the start of the year and about 25% off the top is similar to downturns in other markets, such as many mid-sized US companies. He adds that in Poland, too, the sWIG80 index (which includes 80 mid-size firms from WSE) is several percent below its recent peak.

Ukrainian bonds give similar signals

Łukasz Wardyn points out that shares of Ukrainian WSE companies cannot be treated as a measure of investor sentiment regarding the entire business in Ukraine.

– It’s only certain A small part of the Ukrainian economy Practically from one sector. Therefore, the demand and supply of shares are not an expression of investors’ expectations regarding the state of the entire Ukrainian economy, the analyst notes.

Tomasz Bursa has a similar opinion, and for a more complete picture, he suggests looking towards quoting Ukrainian 10-year government bonds. The dollar-denominated securities it currently has Profitability is around 10 percent.

Thus, the OPTI TFI expert expects the scenario to be repeated eight years ago, i.e. Conflict at the local level. He emphasizes that there is certainly no doubt about the panic we had to deal with in 2014. At that time, the share prices of Ukrainian companies had fallen by 50 percent. lower than their current level.

WIG-Ukraine Index Quotes

Ukrainian companies on WSE. Is it worth the investment?

story not far Stock market panic caused by the coronavirus pandemic The old saying confirmed it It is better to buy stocks when most people are afraid to sell them quickly. In several months (from March 2020 to October 2021), the WIG20 index rose by 100%.

The same may be the case with Ukrainian companies, whose prices may vanish once the geopolitical situation returns to normal. The only question is: When and how to invest effectively? Our interlocutors admit that there is no simple answer.

– It is better to wait for the development of the situation and not try to bet on it yourself. However, in the positive scenario, we may make a strong recovery Companies from Ukraine are so cheap that even after initial increases, they should provide a solid profit opportunity – He resides in a stock exchange.

In his view the best prognosis of the major agricultural companies, which apart from the increases resulting from the mere cooling of the political situation, They should benefit from a good environment for food producers.

Their shares are characterized by low liquidity. So it is difficult to predict actively. In the event that an investor wants to quickly “evacuate” from an investment, he must take into account a significant difference between offers to buy and sell for larger blocks of shares – warns CMC Markets expert.

It also draws attention to the current situation on the chart of the WIG-Ukraine index. The drop in January, when “war” tension was much lower than it is now, was even lower. On this basis, it is concluded that The peak of panic is behind us. Assuming there will be no armed conflict. However, in the event of a war, the massive declines in the stock market would be immediate.