Poland joins group of most developed economies

The shift of the Polish stock exchange to the group of developed markets by Stoxx comes as something of a surprise. Andy Rain/PAP/EPA

Poland is one of the most developed economies in the world, according to FTSE and Stoxx / FTSE Russell.

Poland’s advance/promotion by FTSE Russell, the British provider of stock market indices which comprise the most highly capitalized companies in the UK was already announced in autumn 2017.

But the shift of the Polish stock exchange to the group of developed markets by Stoxx comes as something of a surprise.

Stoxx Limited is a globally integrated index provider, covering the world markets across all asset classes, it is wholly owned subsidiary of Deutsche Börse Group.

Until now, Polish shares have not been present in any Stoxx indices, but now they are to go to the reputable Stoxx600Europe. According to some analysts, this may mean a large capital injection from funds using Stoxx indices as benchmarks.

In the opinion of Dr Artur Bartoszewicz from the Warsaw School of Economics moving Poland to a higher "basket" means that investors will start to perceive Poland as a safe country, between the USA, Germany and Japan.

Not everybody is as optimistic as Dr Bartoszewicz. Brokers expect a rather negative effect of changes in the indices, indicating that on the one hand Poland will descend from the radars of investors interested in emerging markets, and on the other Poland's percentage share in the group of developed countries will be so minimal that for a large number of managers the purchase of shares of Polish companies may prove unnecessary.

Bartosz Sawicki from TMS Brokers S.A. told TFN: ”This is obviously a clear positive from a PR perspective, yet the impact is rather negative as the weight in DM index will account for only 0,164 pct, while it exceeded 1,5 pct in EM index. \

“Consequently, both active and passive funds had to trim their exposure to Polish companies, above all Small and MidCaps.

“The net supply created by those changes amounts to over 500 mln USD.

“Funds most probably started adjusting their holdings in H1 so no lasting effect should be observed.

“Secondly, FTSE Russell indices are less popular than MSCI indices. Therefore the vast majority of international investors will still perceive Poland as an emerging market economy.”

Most analysts agree that only a change of Poland's position in MSCI indices would have a significant impact on the Warsaw Stock Exchange, but for the time being Poland does not meet several criteria required by this index group.

However, head of the Warsaw Stock Exchange Marek Dietl said that he was not worried about the outflow of companies and investors.

"The stock exchange sees a growing interest of new groups of investors, and the addition of Polish companies to the Stoxx index should also help,” he said.

The upgrade will begin Monday September 24th.