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WARSAW AS THE CEE FINANCIAL HUB: HOW FAR HAVE WE COME? AND HOW FAR DO WE STILL HAVE TO GO?
MACIEJ WEWIÓR ADVISOR TO THE PRESIDENT OF THE MANAGEMENT BOARD AN CEO OF WARSAW STOCK EXCHANGE SWIFT BUSINESS FORUM JUNE 2013 R.
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Poland’s Key Position in the enlarged EU
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Poland’s Key Position in the enlarged EU
The largest and most populated new (i.e. accession post 2004) EU member State (population c.a. 38 million)
Poland’s GDP accounts for c.a. 38% of the new EU 12 members’ GDP
GDP growth in 2010: 3.9% GDP growth in 2011: 4.3% GDP growth in 2012: 1.9% GDP growth forecast in 2013: 1.1% GDP growth forecast in 2014: 2.2% Polish government GDP growth forecast in 2014: 2,5%
2008 - 2012 accumulated GDP: 18,1%
Ratings A2 Stable by Moody’s A- Stable by S&P A- Stable by Fitch Source: Ministry of Finance, Polish Central Statistical Office, Eurostat, EBOR.
Key statistics:
Economy: EU GDP (%) 2008 2009 2010 2011 2012 2013f 2014f
2008-2012 accumulated
GDP
Poland 5,1 1,6 3,9 4,5 1,9 1,1 2,2 18,1
Lithuania 2,9 -14,8 1,5 5,9 3,7 3,1 3,6 -2,3
Latvia -3,3 -17,7 -0,9 5,5 5,6 3,8 4,1 -12,1
Slovakia 5,8 -4,9 4,4 3,2 2,0 1,0 2,8 10,6
Estonia -4,2 -14,1 3,3 8,3 3,2 3,0 4,0 -5,0
Romania 7,3 -6,6 -1,1 2,2 0,7 1,6 2,2 2,0
Malta 3,9 -2,8 2,9 1,7 0,8 1,4 1,8 6,5
Denmark -0,8 -5,7 1,6 1,1 -0,5 0,7 1,7 -4,4
Luxemburg -0,7 -4,1 2,9 1,7 0,3 0,8 1,6 0,0
Austria 1,4 -3,8 2,1 2,7 0,8 0,6 1,8 3,1
Finland -8,5 0,3 3,3 2,8 -0,2 0,3 1,0 -2,7
Germany 1,1 -5,1 4,2 3,0 0,7 0,4 1,8 3,7
Bulgaria 6,2 -5,5 0,4 1,8 0,8 0,9 1,7 3,4
Ireland -2,1 -5,5 -0,8 1,4 0,9 1,1 2,2 -6,1
France -0,1 -3,1 1,7 2,0 0,0 -0,1 1,1 0,4
UK -1,0 -4,0 1,8 1,0 0,3 0,6 1,7 -2,0
Sweden -0,6 -5,0 6,6 3,7 0,7 1,5 2,5 5,1
EU (27 countries)
0,3 -4,3 2,1 1,6 -0,3 -0,1 1,4 -0,7
Belgium 1,0 -2,8 2,4 1,8 -0,3 0,0 1,2 2,0
Czech Republic 3,1 -4,5 2,5 1,9 -1,3 -0,4 1,6 1,5
Euro area (17 countries)
0,4 -4,4 2,0 1,5 -0,6 -0.4 1,2 -1,2
Hungary 0,9 -6,8 1,3 1,6 -1,7 0,2 1,4 -4,9
Cyprus 3,6 -1,9 1,3 0,5 -2,4 -8,7 -3,9 1,0
Netherlands 1,8 -3,7 1,6 1,0 -1,0 -0,8 0,9 -0,4
Italy -1,2 -5,5 1,7 0,4 -2,4 -1,3 0,7 -7,0
Slovenia 3,4 -7,8 1,2 0,6 -2,3 -2,0 -0,1 -5,2
Spain 0,9 -3,7 -0,3 0,4 -1,4 -1,5 0,9 -4,1
Portugal 0,0 -2,9 1,9 -1,6 -3,2 -2,3 0,6 -5,8
Romania 7,3 -6,6 -1,1 2,2 0,7 1,6 2,2 2,0
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The generation which does not know the recession
2,6
3,8
5,2
7,0
6,2
7,1
5,0 4,5
4,2
1,2 1,4
3,9
5,3
3,6
6,2 6,8
5,1
1,6
3,9 4,5
1,9
1,1
2,2
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013f 2014f
Poland's GDP 1992-2014f (%)
South Korea
26 years
1961-1987
Germany
25 years
1949-1974
Poland
22 years
1992-2013
Australia
22 years
1992-2013
UK
14
years 1993-2007
USA
10 years
1991-2001
Japan
7 years
2000-2007
Source: Eurostat
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Poland has not gone through a destabilizing boom bust cycle
Poland runs a relatively low and sustainable CA deficit
Polish exports grows faster than of other EU countries
Polish central bank keeps the interest rates higher than other EU countries which makes the growth slower in a period of prosperity but also causes slower recession during a crisis
Limited impact of the global crisis on Poland’s fiscal health
Polish population – one of the youngest in Europe
Poland the most attractive for foreign investments in CEE region
While this global crisis has hit most of the world hard, Poland seems to be practically unscathed
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Source: Eurostat * CEE: Poland, Romania, Czech Rep., Bulgaria, Austria, Hungary, Slovenia, Slovakia
Poland has not gone through a destabilizing
boom bust cycle
-6,00
-4,00
-2,00
0,00
2,00
4,00
6,00
8,00
2006 2007 2008 2009 2010 2011 2012 2013f 2014f
Poland EU (27 countries) CEE avarage*
Real GDP growth % yoy
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Poland’s current account deficit is lower and more stable than in most CEE countries
Current account balance as a % of GDP
Source: Eurostat
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Source: Eurostat
0,6
1,0
1,4
1,8
2,2
2,6
3,0
3,4
3,8
50
100
150
200
250
300
350
400
450
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Poland's share of EU exports (right axis) EU-27 exports Poland's exports
Poland’s and EU (27) exports growth and the Poland’s share of EU total exports (%)
Polish exports grew faster than of other EU countries
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Central bank interest rates - annual data (%)
0,00
2,00
4,00
6,00
8,00
10,00
12,00
14,00
2005 2006 2007 2008 2009 2010 2011 2012
Euro area (changing composition)
Czech Republic
Latvia
Lithuania
Hungary
Poland
Romania
Slovakia
Denmark
Sweden
United Kingdom
Higher interest rates in Poland make the recession slower in the crisis
Source: Eurostat
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Limited impact of the global crisis on Poland’s fiscal health
Source: IMF World Economic Outlook Public debt ratio in Poland:
moderated before the crisis
slight increase during the crisis
no longer rising
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Polish population – one of the youngest in Europe
36,00
37,00
38,00
39,00
40,00
41,00
42,00
Poland EU (27 countries) Developed Europe Emerging Europe CEE Region
Source: Eurostat
Median age in Europe
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Poland the most attractive for FDI in CEE region
Source: European Investment Monitor, Ernst & Young
The number of new foreign investment projects
# Country 2011 2012 Change Share (2012)
1 Poland 121 148 22,30% 3,90% 2 Finland 62 75 21,00% 2,00%
3 Serbia 67 78 16,40% 2,10%
4 Ireland 106 123 16,00% 3,20%
5 Belgium 153 169 10,50% 4,50%
6 Germany 597 624 4,50% 16,40%
7 UK 679 697 2,70% 18,40%
8 Spain 273 274 0,40% 7,20%
9 Russia 128 128 0,00% 3,40%
10 Turkey 97 95 -2,10% 2,50%
11 Czech Republic 66 64 -3,00% 1,70%
12 The Netherlands 170 161 -5,30% 4,20%
13 France 540 471 -12,80% 12,40%
14 Italy 80 60 -25,00% 1,60%
15 Switzerland 99 61 -38,40% 1,60%
CEE region
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Warsaw Stock Exchange largest exchange in the CEE region
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Largest exchange in CEE region with growth potential
In months Jan – Apr 2013, WSE remains the largest national stock exchange in CEE, with domestic market capitalization of EUR 127 bn and equity session turnover of EUR 17.6 bn.
In months Jan - Apr 2013, WSE remains on the 4th position among European exchanges, with over 2.7 mln stock index futures traded volume.
Domestic market capitalization (Apr 2013, EUR bn)
Value of session equity trading
(Jan - Apr 2013, EUR bn)
Source: FESE, Apr 2013.
Stock Index Futures traded volumes
on European exchanges
No. Exchange Volume of trading Jan-Apr 2013 (#)
1. EUREX 112 049 192
2. NYSE Euronext.Liffe 28 848 812
3. NASDAQ OMX 10 990 804
4. WSE 2 734 971
5. SPAIN 2 396 287
6. NORWAY 1 165 928
7. GREECE 507 869
8. HUNGARY 166 264
9. AUSTRIA 117 198
10. ROMANIA (BSE) 2 399
126,7
81,0
36,8 24,2
15,3 13,1 4,8
Warsaw Vienna Athens Prague Budapest Bucharest Ljubljana
17,6
6,4 4,9
2,4 2,3
0,3 0,1
Warsaw Vienna Athens Prague Budapest Bucharest Ljubljana
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45,7 38,8
52,3 61,6
45,1 53,9
Value of equity trading – WSE (EUR bn)
Largest exchange in the CEE region1
1 EOB; domestic and foreign equity trading; regulated and alternative markets 2 annualized
127,5
73,1 72,4 59,2
36,8 34,7
Value of equity trading – CEESEG (EUR bn)
CEESEG - Budapest
8,5%
CEESEG - Ljubljana
0,4%
CEESEG - Prague 8,2%
CEESEG - Vienna 22,0%
Warsaw Stock
Exchange 60,8%
Share of regional stock exchanges in equity trading, Q1 2013
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WSE v. EU stock markets
Turnover value in Jan-May 2013 v. Jan-May 2012 decreased by 3.5% on all EU markets while increased by 10.0% on WSE (turnover in EUR)
Turnover value in I-V 2013 v. VIII-XII 2012 increased by 20.6% on all EU markets and 18.4% on WSE (turnover in EUR)
19,7 18,3
21,6
2012 Jan-May 2012 Aug-Dec 2013 Jan-May
WSE +10,0%
+18,4%
3 897,3
3 117,3
3 759,2
2012 Jan-May 2012 Aug-Dec 2013 Jan-May
UE markets -3,5%
+20,6%
18,0 16,6
19,1
2012 Jan-May 2012 Aug-Dec 2013 Jan-May
Small and medium exchanges
+6,2%
1 976,9
1 642,9 1 885,2
2012 Jan-May
2012 Aug-Dec
2013 Jan-May
Big exchanges
-4,6% 1 131,9
871,4
1 097,6
2012 Jan-May
2012 Aug-Dec
2013 Jan-May
MTFs -3,0%
Source: Thomson Reuters EMSR 1 Small and medium exchanges (turnover<250 bn euro): Athens Exch.,, Bratislava SE, Bucharest SE, Bulgarian SE, CEESEG - Budapest, CEESEG - Ljubljana, CEESEG - Prague, CEESEG - Vienna, Cyprus SE, Irish SE, Luxembourg SE, Malta SE, 2 Big exchanges (turnover> 250 bn euro): BME (Spanish Exch.), Deutsche Boerse, London SE Group (LSE + Borsa Italiana), Nasdaq OMX Nordic, NYSE Euronext; 3 MTFs BATS Europe, Burgundy, Equiduct, NYSE Arca Europe, TOM, Turquoise
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Broad and diversified investor base ensures that growth potential can be fulfilled
Potential for growth through structural development of the market
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¹ Source: Eurostat for GDP values, FESE for market capitalization and trading velocity values (as of the end of 2012)
Potential for further growth through:
Continued “equitization” primarily through
increasing private sector capital raisings and
further privatization of state-owned companies
New financial instruments and investment
strategies as a result of implementation of UTP
system:
Continued development of the
derivatives market
Attraction of new market participants,
including algo-traders
Expected positive effects of changes on the
Polish capital market, such as:
Regulatory driven infrustructure changes
(CCP, omnibus accounts, short selling,
etc.)
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
0% 20% 40% 60% 80% 100% 120% 140% 160% 180%
Mar
ket
Cap
ital
izat
ion
/GD
P
Velocity ratio
WSE
Vienna
Athens
Budapest
Oslo
Deutsche Boerse
BME
IMKB
SIX Swiss
NYSE Euronext Nasdaq OMX Nordic
LSE
Borsa Italiana
Luxembourg
Prague
Bratislava
Irish SE
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18,2
9,3 6,8
15,5
8,6
3.4
2007 2008 2009 2010 2011 2012
WSE Main List
24 61
26
86
172
89 81
33
13
34
38
19
2007 2008 2009 2010 2011 2012
New Connect WSE Main List
162 185 52 242
726
225
2007 2008 2009 2010 2011 2012
NewConnect (PLN m)
A leading listing venue in Europe
Value of IPOs
Source: PwC IPO Watch, PwC IPO Watch Europe Review 2013, regulated markets
Source: WSE , end of December 2012
(PLN bn)
Number of IPOs Leading position in EU by number of IPOs
Source: PwC IPO Watch, PwC IPO Watch Europe Review 2013, regulated markets
Source: WSE, end of December 2012
One of top exchanges in EU by value of IPOs (EUR m)
0
20
40
60
80
100
120
LSE Warsaw NYSE Euronext
Frankfurt NASDAQ OMX
Swiss Oslo Other
2007 2008 2009 2010 2011 2012
0
5 000
10 000
15 000
20 000
25 000
LSE Frankfurt NYSE Euronext
Swiss Warsaw Oslo Italy NASDAQ OMX
Spain Other
2007 2008 2009 2010 2011 2012
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Biggest IPOs/SPOs on the stock market
Date Company Exchange Value
[EUR bn]
09/01/2013 ArcelorMittal Luxembourg SE 1 339.05
23/01/2013 PKO BP WSE 1 257.01
21/03/2013 Bank Zachodni WBK SA WSE 1 167.71
07/01/2013 LEG Immobilien AG Deutsche
Boerse 1 165.19
13/02/2013 LyondellBasell Ind. NV Euronext
Amsterdam 1 142.87
18/03/2013 Ziggo NV Euronext
Amsterdam 1 002.00
25/03/2013 Telefonica SA BME (Spain) 972.73
15/03/2013 Volkswagen AG Deutsche
Boerse 913.64
29/01/2013 Bank Pekao SA WSE 892.16
27/02/2013 Esure Group PLC London SE 803.18
WSE ranked #2 in Europe by number of IPOs and #3 by value of IPOs in Q1 2013
Three offerings of Polish companies among biggest stock offerings in Europe in Q1 2013
Source: Bloomberg
European biggest stock offerings in Q1 2013
Main Market 395 domestic companies, 44 foreign issuers
428 domestic companies, 8 foreign issuers
163 issuers (incl. State Treasury) 361 listed non-Treasury issues
Issuers activity on WSE markets (as at the end of Q1 2013)
+5 companies YoY +5 companies YoY +64 companies YoY +2 companies YoY +45 issuers YoY +118 issues YoY
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Growing number of foreign exchange members …
In Q1 2012 Xelion Doradcy Finansowi - domestic broker joined wide range of WSE market participants;
In H1 2012 Wedbush Europe Ltd and ING NV joined as remote members;
As at end of January 2013, 24 foreign members on WSE
In 2011, 15 foreign companies made their debut on WSE (12 on WSE Main List and 3 on NewConnect); In 2012, 7 foreign companies joined WSE (5 on Main Market and 2 on NC)
On May 4, 2011, WSE launched WIG-Ukraine - first national index in Europe comprising companies originating from Ukraine.
On May, 2012, WSE started to calculate and publish the Central and Eastern European regional stock index WIG-CEE.
…and an increasing number of foreign issuers
Ongoing internationalization
Source: WSE, 2013 YTD.
26 24 25 26
31 29 30 32 34 7 10
17 18 17 19 29 24
26 31 35
43
49 46 49
61 58
2004 2005 2006 2007 2008 2009 2010 2011 2012
Local Foreign Total
Source: WSE, 2013 YTD.
1 3 7 12
23 25 25 27
39 44
1 2 3 6 8
26 27 30
46 52
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Main Market NewConnect Total
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571 623 718
828 970
1 124 1 236
1 480 1 633
1 786
0
500
1 000
1 500
2 000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
21
Value of financial assets held by foreign
investors is on an increasing and stable
trajectory
PLNbn
Value of WSE listed shares held by
foreign investors accounted for 40.3%³ of
market capitalization of domestic shares
listed on the WSE as of the end of 2012
PLN bn
¹ Source: National Bank of Poland ² Source: Polish Agency for Foreign Investment (PAiZ) ³ Source: National Bank of Poland, including both institutional and other types of investors
% value of WSE listed shares held by foreign investors
Value of WSE listed shares held by foreign investors
82 111 153 196 208 110 153 215 184 212
60% 57% 55%
49% 44% 46%
38% 40% 42% 40%
0
50
100
150
200
250
0%
10%
20%
30%
40%
50%
60%
70%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Financial assets in Poland held by foreign investors1
Strong and growing foreign investor base
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Equities 20%
Investment funds
6%
Pension funds 19%
Cash 7%
Deposits 38%
Other 10%
Polish capital markets enjoy a vibrant and
broad retail investor base
Current investment allocation remains geared
towards deposits and cash products providing
potential for increased equity investment
participation
Large privatizations via WSE have attracted
extensive retail investor participation and have
broadened overall appeal of equities among
the general public
WSE IPO attracted ca. 323,000 retail investors
22 ¹ Source: National Bank of Poland, latest available data ² Source: KDPW ³ Defined as accounts with at least one transaction over the preceding six months
Total 3Q 2012 = PLN 1,349 bn
0,95 0,85 0,85 0,91
1,00 1,03 1,13
1,48 1,50 1,51
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Number of retail investment accounts in mn2
Savings/investment distribution of Polish individuals1
Retail investors with increased interest in capital markets
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Since 15 April 2013 – new trading system on WSE
Trading system developed by NYSE Technologies, member of NYSE Euronext Group
State-of-the-art technology, used on the stock exchanges in New York, Paris, Brussels, Amsterdam, Lisbon, on the exchange in Qatar, on the derivatives exchange NYSE Liffe and in a couple of banks
System allowing for real inclusion of the Polish market into the system of global exchanges thanks to new services
Possibility of applying investment techniques popular on well-developed exchanges
UTP – new trading system
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Goals and possibilities of the new system
UTP trading system for the market
Top global functional and technical standards
Potential for growth of liquidity and reduction of transaction costs
New financial instruments (including new classes of derivatives, more diverse structured products)
Access to new investment techniques (including algorithmic trading)
New trading functionalities (new types of orders, new rules of trading)
Transaction system
Internal latency in miliseconds
Performance orders / second
Capacity - mn orders per trading session
Scalability
0.15 60
20 000+ 850
15+ 8
Next Trading Unit
expands system by
10,000 orders
/second
very limited
UTP WARSET
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Warsaw Stock Exchange ul. Książęca 4, 00-498 Warsaw, Poland
tel. +48 22 628 32 32
[email protected] www.gpw.pl
Contact
Disclaimer This presentation has been prepared by Giełda Papierów Wartościowych w Warszawie S.A. (the “Company” or “WSE”) solely for use by its shareholders, clients or analysts and should not be treated as a part of any invitation or offer to sell any securities, invest or deal in or a solicitation of an offer to purchase any securities or recommendation to conclude any transaction, in particular with respect to securities of WSE. The information contained in this document has been compiled in good faith by the Company, however all users of this presentation should take note that some of the data are based or provided to WSE by external sources and has not been independently verified. WSE does not make any representation as to accuracy, fairness, correctness or completeness of the information or the opinions contained herein. WSE shall not be liable for the consequences of any decision made based on information included in this presentation. WSE hereby informs persons viewing this presentation that the only source of reliable data describing WSE financial results and events are current or periodic reports issued by WSE in satisfaction of its disclosure obligations under Polish law.