Summary

Last week was another week of bear domination not only on WSE but also globally. Correction on the stock market was even present on Wall Street, where the S&P500 index dropped on a weekly basis second time in a row. This time index fell by 0.7%, but this time breaking down the barrier of 2100 points round. Larger-scale declines were observed in Western Europe, where major indices - the DAX and the CAC40 - were down by less than 2%. The scale of depreciation during last two weeks already reaches 5% on the German Stock Exchange. In the climate of weak sentiment, and also torn by internal factors (fear of ideas for banking sector) WSE performed poorly. The main index -WIG20 fell by 3% for the second week in a row. Next worst performing sector were banks, in company with biggest polish insurer - PZU, with the 4.5-percent decline. Information on the acquisition of Alior Bank and plans for further expansion in the banking sector has been badly received by investors. Smaller companies performed a little bit better. The mWIG40 depreciated by 1%, and sWIG80 by only 0.5%. This confirms the thesis of a global sentiment as a reason for correction and liquid capital outflow. Looking at a broad market, there are still some interesting investment opportunities.

Large companies, even with a good climate around banks were unlikely to avoid a larger sell-off. In general investors turned away from stock in fear of several factors. Better data from the euro zone (eg. PMIs and industrial orders in German industry) overshadowed concerns about Greece, which extends itself till the end of June the moment of repayment of the debt owed to the IMF. The June instalment in total amount to EUR 1.55 billion. Information about any progress in the talks are not moving markets as quick as the used to few weeks ago. On the other hand Nomura estimates that Greece needs a new bailout worth € 30 billion. The last tranche of frozen aid account for EUR 7.2 billion. Even the release of that tranche could not close the topic of bankruptcy of the country in the coming months. Meanwhile, Greeks promise arduous and lengthy negotiations on the reform program. Another topic that causes tension in the market are the major central banks. The ECB is true not sharpened rhetoric despite recent stronger data on HICP inflation in the euro zone, but the forecast of this variable in 2015 was raised from 0 to 0.3%. In contrast, Friday's positive data from the US labor market is perceived as another building block to the decision to raise interest rates in the US.

This week, in addition to Greece, certainly worth paying attention would be a series of macro data from China - CPI, industrial production and retail sales for May. Data flowing from Europe and the US will be less relevant information.

Technical Analysis

Graph 1. WIG20 daily. Source: Stooq

After the earlier decline in the WIG20 index by 3.1% last week, investors also dealt with a similar scale of reduction. It was held without a marked increase in turnover, however it has brought serious technical consequences. The main line of the uptrend was broken, and sell signal was confirmed by the defeat of support at 2,376 points. However, the aforementioned puncture of the support is not significant, so a return movement to that level or even 2400 points is quite possible. On the other hand only upward move above the resistance at 2,414 points will result in a clearer technical improvement for the benefit of the bulls.

Graph 2. Komputronik daily. Source: Stooq

Komputronik was last week’s stock of the week. In a difficult market shares of IT hardware distributor ended last week with an increase of 10% (and it could have been a lot more). Thus, course outlines new local maximum (currently 12.10 PLN, previously PLN 10.60), remaining in a clear and steady uptrend. On the daily chart a consolidation formation was developed, resembling a flag. Upward breakout gives credence to this formation, and suggesting a potential range of motion in the form of a previous increase wave length (approx. 2.5 PLN), the range is roughly the current level of PLN 13.10. Signal negation of purchase will be fall below PLN 10.60.

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

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