Limited OFE role may impair small and medium partnerships

Merely 2,5 million Poles from eligible 16 million decided to stay in II pillar. Marginalization of OFE caused deepening of differences on the Warsaw Stock Exchange. The WIG250 index, grouping small and medium partnerships lost more than ten per cent, while WIG30 gained over 7 per cent.

We cannot say that some single events, such as the number of people who stayed in OFE, have great importance in a short-term perspective. However, the whole change of OFE functioning way has a meaning for Polish market in this year. Please note that OFE ceased buying Polish stock in February of the current year. It was most felt by the segment of medium and small companies.WIG250 index, which describes the behavior of partnerships from this sector, has decreased by 17 per cent since the beginning of the year. As mentioned above, this correction is very big – comments Sebastian Buczek, chairman of Quercus TFI.

Although the interest of Poles in staying in II pillar is relatively small – the government forecasted that ca. 8 million of eligible are going to chose OFE – experts estimate that the risk of stock sales by OFE has been delayed because the inflow of new contribution will balance the outflow related to so called slide. The chairman of Quercus TFI reminds that the inflow of contribution in the past allowed funds to generate higher demand than supply of stock. It is worth remembering that our Polish market, after 15 years of functioning with such investor as OFE which basically had bought only stock and did not sell them later, actually changes. Since the current year, in order to buy, OFE has to sell something – explains Sebastian Buczek.

In longer perspective, the inflows of new contribution may not balance the outflow of money from OFE. Probably, funds will decide on sales of stock at lower costs. It will involve higher costs of gaining capital in IPO, public offers or debt for partnerships.

Limitation of capital pillar will have the worst influence on small and medium partnerships functioning on the Warsaw stock exchange, which have not aroused interest among foreign investors so far. New regulations concerning OFE increased the risk of their wallet, thus WIG250 achieved worse results than index of WIG30 blue chips. Big companies turned out to be, at least till now, better. Mainly, it is related to economic boom on the world and that there is a demand for stock of these big companies from foreign investors. Therefore, changes on OFE market are supposed to be considered rather in longer term – thinks Sebastian Buczek.


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