Why does investing in global markets make sense?

Over the last decade, investing in Polish equities has been significantly less attractive, especially compared to developed markets, but our stock exchange was also weaker compared to the so-called Emerging Markets (emerging markets). There is little chance that this situation will change significantly in the coming years.

The main reasons are the local conditions, incl. in a small number of liquid companies, the predominance of industries less attractive for investment (such as the energy and finance sectors), the practical lack of technology companies, as well as the growing share of the State Treasury in listed companies.

Emerging Markets with weaker prospects

The differences in the annual rates of return calculated from 2010 to 2022 are very significant: USA + 12,8% annually, Emerging Markets + 2,5% annually, Poland -3.5% annually. The largest US companies, including the technology and healthcare industries, "ruled" the stock markets after 2007 - these two industries today account for about 40% S & P500 index. In the case of the MSCI Emerging Markets index, the technology industry, with an over 18% share, occupies the position of runner-up right after the financial industry. On the other hand, there is practically no technology industry in the Polish indices - in WIG20 it is only Asseco Poland, and in the MSCI Poland index there is also Livechat Software. The Polish indices also include a very large share of the financial industry (over 30%) and the energy industry (over 15%) - which enjoyed less interest from investors.

In addition, the Emerging Markets markets, which include Poland, have shown great weakness in relation to developed markets since 2007. This was not always the case - these markets experienced their "super boom" in 2002-2007. The rate of return for MSCI Emerging Markets in the period from October 2002 to October 2007 was 425%, and in the case of the Polish WIG30 index it was 269%. For comparison, in the case of the S & P500 it is only 91,7%. Is there any chance for a repeat of the 2002-2007 boom for emerging markets? The chances are rather slim.

Diversify!

The years 2002-2007 can be briefly characterized as "strong China, poor technology in the USA". At that time, the Chinese economy was booming, while consuming more and more raw materials. Today, China faces many economic challenges, such as debt and the real estate bubble. In October 2002, we were at the "technology" hole. Nasdaq index has just dropped from the hill in 2000 by 77,9%. After such an experience, investors naturally turned their backs on technology and the internet, but only for a few years. Today, "American technology" may further attract investors. Additionally, in the near future the Polish economy may also pay a relatively higher price for an above-average level of inflation - which could be reflected in the rates of return on local assets.

In our opinion, there is little chance that the situation in Poland or in the Emerging Markets markets will change radically in the coming years. Therefore, the optimal solution for saving Poles is to focus on their greater geographic diversification, and global investing today is fortunately much simpler, cheaper and more convenient than ever before.

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Forex brokers offering ETFs and stocks

An increasing number of forex brokers have quite a wide offer of stocks, ETFs and CFDs on these instruments. For example on XTB we find over 300 ETFs today, a Saxo Bank almost 3000.

Broker
End	Poland	Denmark	Cyprus *
Number of exchanges on offer	16 exchanges	37 exchanges	24 exchanges
Number of shares in the offer	approx. 2300 - shares approx. 1800 - CFDs on stocks	19 - shares 8 - CFDs on stocks	approx. 3 - CFDs on stocks
The amount of ETF on offer	194 - ETF 112 - ETF CFDs	3000 - ETF 675 - ETF CFDs	approx. 100 - CFDs on ETFs
Min. Deposit	PLN 0 (recommended minimum PLN 2000)	2 000 EUR	PLN 500
Platform	xStation	SaxoTrader Pro Saxo Trader Go	Plus500 platform
	REVIEW	REVIEW	REVIEW
	CREATE AN ACCOUNT	CREATE AN ACCOUNT	CREATE AN ACCOUNT

* PLUS500 CY offer

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. From 72% to 89% of retail investor accounts record monetary losses as a result of trading CFDs. Think about whether you understand how CFDs work and whether you can afford the high risk of losing your money.

About the Author

Jaroslaw Jamka - Experienced fund management expert, professionally associated with the capital market for over 25 years. He holds a PhD in economics, a license of an investment advisor and a securities broker. He personally managed equity, bond, mutli-asset and global macro cross-asset funds. For many years, he managed the largest Polish pension fund with assets over PLN 30 billion. As an investment director, he managed the work of many management teams. He gained experience as: Member of the Management Board of ING PTE, Vice-President and President of the Management Board of ING TUnŻ, Vice-President of the Management Board of Money Makers SA, Vice-President of the Management Board of Ipopema TFI, Vice-President of the Management Board of Quercus TFI, Member of the Management Board of Skarbiec TFI, as well as Member of Supervisory Boards of ING PTE and AXA PTE. For 12 years he has specialized in managing global macro cross-asset classes.

Disclaimer

This document is only informative material for use by the recipient. It should not be understood as an advisory material or as a basis for making investment decisions. Nor should it be understood as an investment recommendation. All opinions and forecasts presented in this study are only the expression of the author's opinion on the date of publication and are subject to change without notice. The author is not responsible for any investment decisions made on the basis of this study. Historical investment results do not guarantee that similar results will be achieved in the future.