Euphoria on Polish assets. However, uncertainty factors still remain

We haven't seen such madness on the Polish capital market as today for a very long time, and especially not in reaction to the preliminary results of the parliamentary elections. The scale of euphoria can be demonstrated by the fact that after an hour and a half of the session, the turnover on the Warsaw Stock Exchange exceeded one billion zlotys. Under normal conditions, such turnover is obtained during the entire session on Stock Exchange at ul. Książęca.

Banks and Orlen are gaining heavily

The euphoria concerns mainly banks from the WIG20 index, which after 10:30 grow by almost 2,5% to over 10%, as in the case of PEKAO. The largest company in Poland, Orlen, also recorded a high opening, whose shares also increased by over 10% at the beginning of trading. Nevertheless, it is worth emphasizing that the Polish stock exchange has performed much worse in the last three months than the stock exchanges in the US or Germany. It can be said that today's increase only closed the three-month gap of weakness towards the core markets, such as: SPX or DAX. The open question remains whether the WSE will manage to perform better than the core markets, or maybe we will get back on track with the Western indices? Additional uncertainty may be related to what the final election result will be and who the President will entrust with the mission of forming the government. In a negative scenario, it may turn out that the government will only be formed at the turn of December/January.

PLN with a large gap at the opening

The Polish currency was the first to show its strength when it opened forex market the EUR/PLN exchange rate fell to its lowest level since mid-August. Currently, the quotations are in the region of 4,48, which may not be good news anyway. A strong zloty in the current macroeconomic environment and with such a difference in inflation levels makes Polish export companies less competitive, and the benefits of reducing the inflation rate seem to be smaller. The real exchange rate is again very strong, which is again a significant challenge for entrepreneurs.

It is also worth noting that the debt market reacted very positively to the exit and late polls. The yield on 10-year bonds, which was close to 6% in October, has now dropped to 5,65%. This could be the biggest one-day drop in bond yields since early February 2023.

Let us recall that according to the late poll, PiS obtained 36,6%, KO 31%, and Trzecia Droga 13,5%. The Left received 8,6% and the Confederation 6,4%. We are currently waiting for the official data from the National Electoral Commission, where as of 11:11 35,59% of the votes had been counted. The next step will be up to the President of the Republic of Poland, who will indicate who he will entrust with the mission of forming the government. So far, this was the person from the party that received the most votes in the elections. Therefore, it seems that there are still many uncertainty factors, not only for today or tomorrow, but also until the end of the year.