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12.10.2007 - Weekly Stock Markets Brief

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Date: 2007-10-12 15:48

It was a good week for the equities markets. Improving mood of investors caused them to go shopping and indices increased. On Thursday a series of worse-than-expected quarterly reports of US companies brought American indices down. The Warsaw Stock Exchange’s WIG20 gained over 3.50% during the course of the week.

 

Since last week investors hear comments from many analysts that the subprime mortgages crisis in the US is over. Risk aversion is declinig and investors are more willing to invest their money into more risky investment vehicles like stocks. This week the positive impulse came from the US where the Federal Open Market Committee (FOMC) published the minutes from its last meeting when the federal fudns rate was cut by 50 basis points to 4.75%. The Fed signaled another interest rate decrease causing US indices to rally. On Thursday that run for new high was stopped by worse-than-expected quarterly reports of major American companies. The Dow Jones Industrial Average after dramtically dropping on Thursday, ended the week with a 0.15% loss at 14,008. The S&P500 reached a new all-time high at 1,575.7 on Thursday but after quarterly reports publications it retreated to 1,553.8 finishing the week at the same level it started.

Asian indices rallied. Growing consumption and great economic outlook for the region is attracting investors from all around the world. Three out of the five biggest IPOs this year were accomplished by Chinese companies. To no surprise, the Shanghai benchmark index, the CSI300, is gaining week after week. During the last 7 days it grew by 6.03% to 19,049. Closely behind the Chinese stock exchange is Hong Kong’s Hang Seng Index. Last week is advanced by 1.75% to 28,822, although on Thursday morning it broke the 29,000 barrier for the first time in history to reach 29,099.

Increasing appetite for risk makes Polish equities very attractive to investors hoping for higher returns. During last week, the WIG20, grouping the 20 biggest and most liquid Polish companies, rallied 3.58% ending around 3,895. On Thursday it was quoted even over 3,900. The Polish major benchmark stock index missed its all-time high by 5 points! The outlook for equities looks bright. Even though American indices retreated on Thursday they should return to the upward trend. The economic situation seems to be stabilizing. The possible interest rate cut should give another impulse for stocks to increase. Polish investors will follow that trend and reaching a new all-time high by the WIG20 should be a matter of days.


Adam Narczewski