The Warsaw Stock Exchange (GPW) is back after three years of bull market activity. Time for new growth sectors.

The Warsaw Stock Exchange has been recording impressive growth for almost three years, some of the longest and most dynamic in the history of the Polish capital market. Throughout this time, the banking sector has been the main driving force..

Banks took advantage of high interest rates, which allowed them to achieve attractive margins on their loans. Stable demand for consumer and mortgage loans translated into strong financial results for these institutions. As a result, their condition had a positive impact on the valuations of the entire market and on WIG20 index, which reflects the quotations of the largest companies on the WSE.

The weakening role of the banking sector

However, the situation is now changing, and banks' role as growth drivers is beginning to wane. The government's planned corporate income tax increase may negatively impact banks' profitability and reduce their net profits. This not only means higher tax burdens, but also a potential slowdown in investment and limited development activity in the financial sector. At the same time, the National Bank of Poland's interest rate cuts are affecting banks' interest margins.Lower interest rates result in lower revenues from loans granted, which may translate into poorer financial results for these institutions.

According to the forecasts of the National Bank of Poland, Polish CBA is expected to reach its local peak in the middle of next year. This means that the pace of economic growth may begin to slow, further increasing the need to diversify growth drivers in the capital market.

As a result of these changes, the banking sector may cease to be the main growth driver on the Polish stock exchange. Investors should prepare for weaker growth dynamics in this segment and more frequent corrections. This is a natural consequence of shifts in the macroeconomic and regulatory environment, which are altering the foundations of the current bull market.

In this new environment, the WSE will need other growth stimuli. Manufacturing and retail are among the most promising sectors. Manufacturing companies, especially those operating in foreign markets or focusing on the domestic market, can benefit from cheaper financing and growing domestic demandThe reduction in interest rates benefits not only consumers but also businesses, which have easier access to investment capital.

Investment strategies and portfolios

Similarly, the retail sector could benefit from a more lenient monetary policy. Lower interest rates increase consumer willingness to spend, which translates into increased revenues for retail companies. A growing number of Poles can afford credit-financed purchases or take advantage of cheaper consumer financing, which supports retail sales growth.

Given these changes, investors should modify their investment strategies and portfolios accordingly. Instead of focusing solely on the banking sector, it's worth paying more attention to manufacturing and retail companies, which have the potential to become new growth engines in the Warsaw Stock ExchangeAt the same time, it's worth observing the development of technologies and innovative companies, which are gradually gaining in importance and may provide an interesting alternative to traditional industries.

However, we must not forget about risks. Government tax policies, changing regulations, and global economic turmoil remain significant sources of uncertainty..

The nearly three-year bull market continues, but its nature is changing. Banks, which until now were the pillar of growth, will gradually lose importance. In their place, manufacturing and retail companies will play an increasingly important role, opening up new investment opportunities thanks to favorable financing conditions and rising consumption.

Source: Mikołaj Sobierajski, XTB