WARSAW STOCK EXCHANGE (WSE)

Pawel Pretkiewicz MA1N0224

Warsaw Stock Exchange - History

Polish capital market traditions go back to 1817, when the Warsaw Mercantile Exchange was established.

On april 12, 1991 after overthrow of Poland’s former comunist regime the Warsaw Stock Exchange Company was established

WSE held its first trading session on April 16, 1991 with five listed companies, all of which were formerly State-owned companies that had been privatized.

In 1999, Poland reformed its pension system, which contributed to an increase in domestic institutional investment, and in 2004 it joined the EU. These developments helped to boost trading volume in subsequent years.

Warsaw Stock Exchange is the largest national stock exchange in the CEE and one of the fastest-growing exchanges in Europe.

Warsaw Stock Exchange (WSE)• Instruments such as shares, bonds and various derivative products can all be

traded electronically on this exchange.

• WSE runs several markets: Main Market (trade in equities, equity-related and other cash instruments, derivatives), NewConnect (trade in equities and equity-related instruments of small and medium-sized enterprises), Catalyst (trade in corporate, municipal, co-operative, Treasury and mortgage bonds operated by the WSE and

BondSpot), Treasury BondSpot Poland (wholesale trade in Treasury bonds operated by BondSpot).

• According to FESE data, WSE market capitalisation at the end of October 2013 was EUR 206 381 million

Main Stock IndexesWIG20 Index of 20 companies with the highest capitalization, listed based on top

turnover )mWIG40 Index of small and medium-sized companiesWIG Warsaw Stock Exchange Index, which includes shares of companies whose total

market value is 99% of the main marketTechWIG Price index includes companies qualified for the Technologies Segment sWIG80 Index of the smallest listed companiesNIF National Investment Funds IndexSector subindexes (ex. WIG-Banks, WIG-Media)

WSE key success factors• Strong market institutions and regulations

• Pension funds in Poland invest up to 40% of their assets in equities of the companies listed on the regulated market

• Large individual investor base

• Privatisation of the biggest state-owned enterprises through an IPO

• Relatively large internal market

• Ability to compete with London and other exchanges for the biggest CEE companies

• Poland’s resilient economy

securities Rate_min Rate_max growth growth %

Big 29 000 235 000 206 000 710%

Bre 188 000 2 100 000 1 912 000 1017%

Efekt 57 000 565 000 508 000 891%

Elektrim 100 000 1 660 000 1 560 000 1560%

Exbud 48 500 281 000 232 500 479%

Irena 39 500 1 200 000 1 160 500 2938%

Kable 31 000 435 000 404 000 1303%

Krosno 23 000 515 000 492 000 2139%

Mostostalexp 151 000 1 325 000 1 174 000 777%

Okocim 100 000 1 395 000 1 295 000 1295%

Próchnik 36 000 645 000 609 000 1692%

Swarzędz 36 000 352 000 316 000 878%

Tonsil 19 000 379 000 360 000 1895%

Uniwersal 7 800 225 000 217 200 2785%

Wedel 188 000 2 900 000 2 712 000 1443%

Wólczanka 34 000 625 000 591 000 1738%

Żywiec 122 000 2 100 000 1 978 000 1621%

Table 1: Increases in share prices during the a bull market from 1993 to 1994

Privatisation through the Warsaw Stock Exchange (WSE)Ciech, KGHM, PKN Orlen, PKO BP, PZU, …..

• Interesting examples where the Treasury managed to:• increase management effectiveness through privatisation• reduce the Treasury’s ownership below 50%• ensure high free float• retain control over the strategically important companies• ensure high transparency

As a result of the privatisation process:• The WSE helped the Treasury privatise companies• The Treasury helped the WSE increase its capitalisation and attract domestic and

foreign investors

Treasury’s ownership of selected companies privatised through the WSE

Company Shareholder Ownership (% of capital) PKN Orlen AVIVA OFE 5.08% Oil&gas ING OFE 5.17%  Treasury 27.52%  Free-float 62.23% KGHM Treasury 31.79% Mining Free-float 68.21% PKO BP BGK Bank (state-owned) 10.25% Banks Treasury 40.99%  Free-float 48.76% PZU EUREKO B.V. 12.99% Insurance Treasury 45.19%  Free-float 41.82% Ciech PZU OFE 6.12% Chemicals Pioneer Pekao Investment Management SA 19.64%  Treasury 36.68%  Free-float 37.56%

Privatisation of the largest banks in Poland

Name of the bank before privatisation Year of privatisation Method of

privatisationBRE Bank 1992 IPOWBK 1993 IPOBank Śląski 1994 IPOBank Przemysłowo Handlowy 1995 IPOBank Gdański 1995 IPOBank Ochrony Środowiska 1996 IPO, state-controlledPowszechny Bank Kredytowy 1997 IPOBank Zachodni 1999 Sale to strategic buyer, IPOPowszechny Bank Gospodarczy 1999 Merger with Bank PekaoBank Depozytowo Kredytowy 1999 Merger with Bank PekaoPomorski Bank Kredytowy 1999 Merger with Bank PekaoBank Pekao 1999 IPOBank PKO BP 2004 IPO, state-controlled

Bank Gospodarki Żywnościowej 2004 strategic buyer, planned IPO

Bank Gospodarstwa Krajowego state owned

Source: nbp.pl

Thank you !