Summary

The last week’s events did not support the stock market sentiment. At the beginning of the past week there appeared another disturbing news from North Korea and then the hurricanes in the US intensified market fears about their potential economic effects for the economy. Moreover, it cannot be ruled out these might be very severe. As a result, during the whole past week, the NASDAQ fell by 1.2%, the DJI went down by 0.9% and the S&P500 decreased by 0.6%. In Europe, the British FTSE250 declined by 0.9%, the French CAC40 shrank by 0.2%, while the German DAX proved to be mainstay of growths (+1.3%). After all, the ECB Governing Council meeting deserved the event of the week name. Unlike to the expectations of some investors, the meeting did not bring any changes in the monetary policy. Mario Draghi emphasized that September was not autumn – there had been an announcement that the ECB would consider the future of QE in autumn. Nevertheless, a conference with the ECB chief should be regarded as a dovish one, especially since the projections of inflation for the Euroland were driven down. However, the market interpreted the speech of Mario Draghi in a quite different way, perhaps, as a not enough dovish one. As a result, euro appreciated against dollar remarkable during the conference, as well as during the whole past week.

The last week was not also fulfilling for the investors at Ksiazeca. During the whole past week, the WIG20 declined by 1.7%, the mWIG40 deteriorated by 0.4% and the sWIG80 went down by 1.9%. Investors paid special attention to the new strategy of Orange last week. However, the plan did not meet market expectations. In addition, there was a lot of disappointment over CCC. The company, whose market capitalization had significantly increased lately, announced that it would issue 2 million new shares. The decision adversely affected the stock price which fell from PLN 291.5 to PLN 273. Slightly more optimistic news came from games developers. The financial results of CD Projekt and CI Games were higher than market expectations. It is worth adding that the MPC took a decision on the interest rates as well. In line with the market consensus, there were not any changes in the Polish monetary policy. The president of the NPB reiterated that the policy of the interest rates stabilization may last until the end of 2018. On Friday, investors were waiting for a publication of the credit rating for Poland by Moody’s. Nonetheless, this time the agency did not update the assessment of the Polish creditworthiness.

In the current week, investors will learn data on the inflation, among others, from Poland, Great Britain and the US. Furthermore, it is worth paying attention to the releases of the dynamics of the manufacturing production and the retail sales from the US and China. It should be added that the meeting of the UN Security Council on the situation in North Korea will be held today.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

After a very successful period for blue chips a correction was started – the index of the largest Polish companies was dominated by the red color last week. Thus the WIG20 ended Friday’s trading session at 2,483 pts.. Nevertheless, in a broader term the index has remained in a clear and secure upward trend, especially since recent declines were accompanied by the low volume of trade. The nearest resistance level stands at 2,550 pts., although it seems that the barrier of 2,600 pts. should be considered as a target level, which in years 2012 – 2015 was too challenging resistance level for the market.

Graph 2: CD Projekt daily. Source: Stooq

This time CD Projekt was chosen as a company of the week. During the last five trading days the share price of the entity increased by 12.4%. A publication of very good financial results for the first half of 2017 was an incentive to the stock price’s growths which led to the end of consolidation. Its upper limit at PLN 88.8 was broken and a new historical peak at PLN 95.25 was reached. Attention should be paid to the increased volume of trade. There are many indications that the share price has started a new upward wave. The nearest resistance level stands at the psychological level of PLN 100. The barrier may be soon broken, because a long-term trend is based on strong fundaments.

Authors: MM Prime TFI S.A. Investment Management Team

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