Analyst View: Polish markets gain after election flags major political shift

Safi Silver

16/10/2023 08:20

LONDON, Oct 16 (Reuters) - Poland's ruling nationalists
appeared on Monday to have lost their parliamentary majority in
the nation's most pivotal election in decades, potentially
opening the way for opposition parties to seize power in what
would be a huge political shift.
    
+ Poland's blue chip index WIG20  .WIG20  rises 3.2%
+ Banks rise as much as 9% 
+ Zloty strengthens to as much as 4.4434 to the euro  EURPLN= ,
strongest since late August
+ Hard-currency bond spreads tighten to 125 bps  .JPMEGDPOLR    
 
    
    Below are analysts' reactions to the event.
    
    FRANTISEK TABORSKY, ING, UNITED KINGDOM:
    "Exit polls after Sunday's general election indicate a
victory for the ruling party, but a majority for the opposition
parties. The prime minister has indicated an interest in trying
to reassemble the government, but unless the early results
change fundamentally, we can expect a change in Poland's
leadership."
    "We can expect the market to maintain the positive
sentiment, which should be positive for Polish assets in
general. For now, we see the key level of EUR/PLN 4.450, which
will have to be broken on the way down."
    
    OLLE HOLMGREN, SEB, SWEDEN
    "A more definitive election result will not be presented
until this evening, or maybe even tomorrow, and the current
ruling party, Law and Justice, will be the largest party and
will thus have the first opportunity to try to form a
government. Even if the opposition becomes the largest, it can
take a long time to unite all parties on a common policy."
    "Poland has hosted over 1.5 million Ukrainian refugees, and
it serves as the main hub for the transfer of arms and aid to
Kiev. The zloty has been one of the better performing emerging
market currencies against the euro over the past month, partly
due to expectations of a political change. If the results of the
polling station survey are confirmed, the currency should
continue to strengthen."
    
    LUKAZS JANCZAK, ERSTE GROUP, POLAND
    "The first reaction of the wider market will also be
positive. This is indicated by the currency market, where the
Polish zloty is strengthening, and it seems that what the
investors may assume (...) is that the potential government of
the former opposition will have a more open attitude towards the
EU. They can expect an unfreezing of National Reconstruction
Plan funds, and improvement of corporate governance."
    
    MICHAL KOZAK, TRIGON, POLAND
    "Probably the opposition's victory and perspective of
forming government in the next few weeks would be very positive
news for Orlen. We expect fuel wholesale and retail prices to
rebound, which can continue to occur until information of the
government's formation. Looking at the medium term, Orlen's
shares may rerate, as an effect of the lowering of political
risk."     

 (Reporting by markets team in Warsaw, Gdynia and London,
compiled by Karin Strohecker; Editing by Amanda Cooper)
 ((karin.strohecker@thomsonreuters.com; +442075427262; Reuters
Messaging: karin.strohecker.reuters.com@reuters.net))