Page 17 - Poland Outlook 2022

of 2022.

6.2 Stocks

After a turbulent 2021, the Warsaw Stock Exchange (GPW) is looking forward
to something less of a rollercoaster in 2022.

Some stability is expected, although not without risks. “As long as inflation
remains uncomfortably high, central banks may be less inclined to pursue
dovish monetary policy, even at the risk of markets suffering broader, more
severe falls. Investors' willingness to buy, while still strong, will also be tested
by a marked slowdown in China's GDP growth, and Russian threats to Ukraine
may end in a destabilizing round of sanctions and counter-sanctions,” Ipopema
Securities writes in an outlook.

“We recommend that you maintain a selective approach when picking
companies to invest in this year. We are seeing limited growth for the WIG20
index ... [at] around 7% throughout 2022,” the brokerage house adds.

Analysts also hope for a renewed interest in IPOs after some disappointments
in the second half of 2021 – when a series of poor debuts tested investors
looking for strong gains in the wake of the hit IPO of Poland’s online
e-commerce platform Allegro in late 2020.

Valuations of those recent IPOs are climbing back up again, encouraging
companies to ready new offers. A dozen or so prospectuses are in the works
at the KNF, Poland’s financial market watchdog, some in the final stages with
debuts a matter of weeks away. The first IPOs of 2022 could be the industrial
IT solutions company Transitions Technologies and the art auction house
DESA. A number of companies are also going to move from the alternative
market NewConnect to the main market.

6.3 Bonds

Last year, Poland’s bond yield curve flattened, predicting interest rate
increases by the NBP. In Q4 2021 asset swap spreads almost returned to
pre-pandemic levels thanks to the termination of the QE programme by the
NBP.

By now, the interest rate markets have already priced in the central bank’s
tightening. Analysts expect the 10-year bond yield will end in 2022 at 3.2%,
which will be a consequence of the main interest rate reaching 3% by
mid-2022 and the fact that the 2- to 10-year bond yield is often subject to an
inverse curve when the rate of increase cycle comes to an end.

Yields may remain lower more of less in the same place y/y, however, there
are risks. If the key ones materialise, possibly damaging Polish GDP growth,
there may be a decline in the long end of the curve to 2.5% or even lower.

In fact, the year 2022 did not begin impressively for the 10-year papers as the
yield on them exceeded 4%, the first such development since 2014.

17 Poland Outlook 2022 www.intellinews.com