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Stock and bond markets

The main trends of the global financial markets in 2014 were strongly associated with the development of the economic situation in the USA and the euro zone, as well as the sharp decline of oil prices. In turn, Polish Treasury bond market observed a continuation of the bull market, what was in line with the European trend.

Stock markets especially in Central and Eastern Europe remained under significant impact of the conflict in Ukraine and the events which followed - increased geopolitical risk in Europe, the problems of the Ukrainian economy, Western sanctions and Russian counter-sanctions, the decline in Polish exports to the east (especially food).

The biggest influence on the share prices in Poland had the reform of the pension system. Introduced changes have forced the management of open pension funds to introduce a radical change in the investment policy.

As far as events in Poland are concerned, the biggest influence on the share prices had the reform of the pension system. Introduced changes have forced the management of open pension funds to introduce a radical change in the investment policy, which resulted in a decrease of demand for shares from major investors in the Polish market. Open pension funds turned towards the most liquid domestic and foreign shares, at the expense of smaller and illiquid ones. This resulted in a significant disparity in the behaviour of share prices of the largest (WIG20TR) and smallest (sWIG80) companies listed on the Warsaw Stock Exchange.

In 2014 there was still a boom on the market of Polish treasury bonds, which was in line with the general European trend. The lower inflation and the Monetary Policy Council’s decision to reduce the interest rates constituted a support for the declining yields of the Polish Treasury instruments, especially the ones at the long end of the yield curve.

In 2014, it could be also observed that Poland slowly ceases to be seen as an emerging market. It is confirmed by the behaviour of the WIG index in comparison with the MSCI Emerging Markets which reflects the behaviour of emerging markets. Usually, both of them moved in the same direction. There was a noticeably lower correlation in the behaviour of these indices in 2014.