Page 19 - bne IntelliNews Poland Outlook 2025

overall undervaluation coupled with their strong fundamentals and upcoming interest rate cuts by the National Bank of Poland (expected around the mid-point of 2025). That said, a delay in monetary easing would support banking stocks that exert a powerful influence on main GPW indices.
Without no new capital flows or without companies actually turning in profit as expected, stock could remain relatively cheap throughout 2025, with any stock price increases driven more by the good condition of individual listed companies rather than the overall good shape of the market. Another lies in the relatively high valuations of US companies, making 2025 unlikely to pass without major price corrections in New York and other major stock exchanges.
On the other hand, high economic growth dynamics – currently forecast at over 3% in 2025 – could drive positive performance of Polish stocks next year. Main GDP drivers – private consumption and investment – are going to support profit growth by domestic companies. The ongoing war in Ukraine is a source of uncertainty but also, were the conflict to end in 2025, it is likely to become a positive for the Polish stock market.
7.2 Bonds
The issuance plan for 2025 targets record levels, both in gross terms, coming in at PLN553bn, and net terms, expected to be PLN367bn. Poland should not face any significant problems finding buyers, with banks remaining primary buyers of Polish government bonds.
Late 2024 saw Polish government bonds increase their yields sharply, driven by a combination of factors, including higher asset swap spreads as a proxy for fiscal risk, the postponement of interest rate cuts in Poland following a shift in the NBP president’s narrative, and rising yields in core markets.
These influences are anticipated to persist at least into the early 2025. In effect, Polish 10-year bonds will enter 2025 with yields slightly below the psychological level of 6% with only minor downward movements anticipated in the first few months.
At the turn of the first and second quarters, however, the downward trend is expected to gain momentum. By then, following the results of the March macroeconomic projections by the National Bank of Poland, the market is likely to start pricing in the possibility of a first interest rate in mid-2025.
At the same time, the Eurozone will be further along in its monetary easing cycle (aiming to maintain the spread to German Bunds), as will
19 Poland Outlook 2025 www.intellinews.com