Summary

The last week of the year for investors in Poland lasted only three days. Consequently, there were lower volumes. In addition, investors did not learn any significant economic data. What is more, despite the promising start of the week the index of the largest companies failed. As a result, the WIG20 decreased by 0.9%. Unlike Blue Chips, small and medium – sized companies ended the week in the green. The mWIG40 rose by 0.4% and the sWIG80 took off by 2.8%. The tense political situation did not help the largest companies. Moreover, the parliament passed the law on the taxation of banks. It seemed that the new imposition had been discounted in prices but MPs decided to increase the tax rate. This adversely affected share prices of banks. Furthermore, the inconsistency of Polish politicians impacted the WSE negatively.

Last week foreign stock exchanges were also opened for four days or less. Investors celebrated the New Year’s Eve. Despite these circumstances there was a considerable volatility of the most important indices. At the beginning of the week investors learnt the Conference Board Consumer Confidence Index which stood at 96.5 pts. to the expected 93.6 pts.. It gave a positive signal. Therefore, markets were dominated by bulls. However, then there were published data on the property market and the labor market. They were worse than expected. To add insult to injury, the Chicago PMI Index stood at 42.9 pts. vs 49.7 pts. expected. As a result, bears dominated markets and American indices ended the week in the red. The DJI decreased by 0.7%, the NASDAQ and the S&P500 went down by 0.8%. European stock exchanges achieved slightly better results. British FTSE250 and German DAX rose by 0.1%. French CAC40 declined by 0.6%. In regards to economic data, there was a release of the PMI indicators in China (by CFLP) on Friday but they should be discounted in prices today. The services PMI stood at 54.4 pts. and the industrial PMI stood at 49.7 pts. These meant that the economic situation in Chinese service sector was really good but in an industrial sector was still negative. However, the final industrial PMI index (by HSBC/Markit) was nail in coffin of markets’ sentiment at the beginning of the week.

There will be further information on the condition of an industrial and a services sectors in Europe and in the US. Nevertheless, Friday’s payrolls reading will be the most crucial week’s event. On the other hand, unexpected concerns about Chinese economy may override positive data from the US economy.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

The WIG20 approached the psychological level of 1,900 points but at the crucial moment failed. The last trading session of the year ended in the red. As a result, the index of the largest companies did not break an important resistance. New year’s opening price stood at 1,859.15 points. Moreover, the RSI oscillator did not indicate any clear signals. The celebration of the New Year could be a justification because it caused lover volumes. Nevertheless, the January effect is coming. It often brings increases in stock prices.

Graph 2: PKP Cargo daily. Source: Stooq.

In the immediate future it is worthy paying attention to PKP Cargo. Its share price grew sharply last weeks. Lately, the share price approached an important resistance of PLN 71. Perhaps there will be a trend reversal. It was confirmed also by the RSI oscillator which may indicate a sell signal soon. Moreover, there was a downward trend in the medium term which did not help to break a PLN 71 mark. Nevertheless, if the share price breaks the resistance, it will probably increase to a PLN 80 level and the investors’ sentiment will change to positive.

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

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