Markets plunge following Russian invasion of Ukraine
Warsaw stocks keep suffering massive losses, with the large-cap index WIG20 plummeting by 12.3 percent at 12:22 local time. First estimates point to the possible slowdown of Polish GDP growth to around 3 percent within the next 3-4 quarters.
Warsaw blue chip index WIG20 opened with a 5.4 percent loss while the PLN weakened to EUR 4.62 on Thursday morning. After midday, WIG20 plummeted by 12.3 percent while the PLN weakened to EUR 4.64.
Polish T-bonds also lost ground, especially 2-year bonds with the yield exceeding 3.74 percent at 12:23 local time.
Poland's GDP growth may slow down to around 3 percent within the next 3-4 quarters as a result of Russia's hybrid war on the energy market, head of the state development fund PFR Pawel Borys predicted in an interview for the Wirtualna Polska portal.
"At the moment, I estimate the cost for Poland of Russia's hybrid war on the energy market, or related to the war in general, at around 1 percent of Polish GDP, which means that growth may slow down," he said.
Earlier in February, Borys expected Poland's GDP growth to reach 4.5 percent in 2022.
PKO BP bank economists predicted that PLN/EUR will face heightened volatility and most likely will remain under pressure from geopolitical factors. They warned in their morning note to markets that any potential for gains in Polish T-bonds might be "partly mitigated by rising concerns over geopolitical destabilisation in the CEE region".
"Polish assets are reacting to the Russian invasion on Ukraine in line with the pattern: stock exchange down, weaker PLN and T-bond yields, as well as a higher expected trajectory of interest rates," Millenium bank economists noted.
In those circumstances, some analysts expected that the finance ministry would cancel a PLN 3-6 billion (EUR 648 million - 1.3 billion) regular auction scheduled for Thursday.
PKO BP economists predicted that placing the offer at the maximum price would be a challenge, taking into account the "unstable market situation and lower demand". The auction went ahead and Poland sold PLN 3.45 bln (EUR 744 million) in T-bonds.