The Warsaw Stock Exchange is to launch a new, expanded WIG30 index of its 30 largest and most liquid listed companies next month.
The WSE hopes the move will boost interest among investors in the additional 10 stocks. It also hopes more of the biggest companies in central and eastern Europe will want to be listed on it.
Since the bourse began publishing its blue chip WIG20 index in 1994, Poland’s economy and its capital markets have transformed. The number of companies listed on the main market has grown from 24 to 443 and capitalization of domestic companies has risen from €1.7bn to €124bn.
In 2006 the WSE overtook its rival in Vienna to become the largest bourse in central and eastern Europe.
WIG30 will be first published on September 23. The WIG20 and WIG30 will be published in parallel until the end of 2015 to give investors a chance to exit investments in derivatives based on the WIG20.
“The changes to the main stock market indices are intended to better reflect the condition and size of our market and to stimulate its development. This should improve liquidity on the equities market and – in the longer term – stimulate the derivatives market,” said Adam Maciejewski, president of the WSE’s management board.
The WIG30 will be a price index. To reduce the concentration of companies from the same sector on its main index, WIG30 will include no more than seven companies from each exchange sector and the share of a single stock in the index capitalization will be capped at 10 per cent.
Neil Shearing, head of emerging markets research at Capital Economics, wrote to beyondbrics:
This change reflects the significant development of the Polish stock market over the past decade and the deepening of capital markets in the country more generally. This process has much further to run, and will play an important role in providing access to capital for business investment. So it’s a positive news story, even if the immediate direct macro impact is likely to limited.
Analysts at Wood and Co., a central European investment bank, said in an emailed note that
While we do not believe the new index is a game changer for the Polish market, it should increase trading volumes in the smaller names, which are not included in the current blue-chip index… In the longer term, the change could be positive for attracting potential IPOs as it should be easier to get into the new WIG30 index than the current blue-chip index.
By expanding its main index portfolio, the WSE expects an increase in the number of companies listed on its mid-cap index, mWIG40, and its small-cap index, sWIG80. The bourse will begin publishing WIG50 and WIG100 indices from March next year.
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