In 2007 the Warsaw Stock Exchange has seen a record number of new listings. In this interview for Polish Market Ludwik Sobolewski, President of the Warsaw Stock Exchange, explains why. He also looks at the prospects facing the stock market.

Q: The year 2007 has seen a record number of new listings on the Warsaw Stock Exchange (WSE). Could that imply that a similar development will be observed over the next few years?
A: I predicted at the end of last year that 2007 will see a record number of flotations but it’s better than I expected. Adding NewConnect companies – and these are also entities debuting on the public market – to the number of those entering the primary, regulated market – we notice that the Warsaw Stock Exchange has been going through a period of high popularity among entrepreneurs. This is an indication of the growing demand for capital as well as of the companies’ aspiration to enhance their recognizability and trademark by being listed. As far as prospects for 2008 are concerned, we haven’t made any estimates yet. I suppose, however, that the number of new companies floated on the stock market will be smaller than in 2007, but the difference should not be great. The number of companies will certainly be higher if we take the whole public market together, that is including NewConnect. If both markets are summed up, the total number will certainly be higher than 100.
Q: What about the idea of privatising the Warsaw Stock Exchange?
A: Time for that will surely come. That, however, must be done reasonably. No ideal ownership model for a stock exchange exists. The model in which the state is the main owner, is theoretically the weakest but fortunately it is practice that ultimately proves whether it is so or not. The Warsaw Stock Exchange has always been free from political interference. Admittedly, a state-owned stock exchange model of the WSE hinders somewhat its regional expansion in terms of capital links with other stock markets. But may I note at this point that I am definitely against bringing in any stock exchange as shareholder of the WSE. We are but striving with great determination to acquire stakes in other stock markets. For the first time in WSE’s history we have achieved that by acquiring stakes in Sibex. It is a small stock exchange in Romania but except the WSE, all stock markets in our region are small. However, it is worth noting that the Romanian market in highly promising in terms of its prospects. The present WSE shareholding structure does not hamper its building of relations with entrepreneurs. Due to that as well as our investment companies’ efforts as many as ten or so foreign companies will enter the WSE before the end of 2007. This is rather something unusual in this region.
Q: It has just been announced that three out of four Polish power-engineering groups will be privatised in 2006 through IPOs. What would than mean for WSE?
A: It will be a very significant development. Investors need companies with great capitalization and high free float. The capitalization of the power-engineering companies will certainly be impressive but an appropriate part of it will have to be free-floated. Failing that, “the mountains will bring forth a mouse”, as the saying goes and our market will not benefit much from the privatization of these groups. And neither will the groups themselves.
Q: Why is it that not all stock market debuts materialise at the time planned?
A: This is the effect of saturation which means that investors have become more exacting. That’s fine. I believe that consequences of the rise in demands and expectations, coupled with an unperturbed good economic situation and consistent pursuit of the Polish market’s development strategy will be very good. Attention should be given not only to quantitative, but also – and first of all – qualitative stock exchange indices.
Q: Which of the WSE indices would you single out as the most important one?
A: All of them are important. But first I might perhaps mention the mWSE and sWSE indice, which have been introduced only recently and have streamlined classifications. We have but modified somewhat the methodology of designing all indices. The important one is the sectoral index for the developer branch because it reflects WSE’s growing position. I am also watching the behaviour in its initial stage of the NCIndex, that is the NewConnect index market.