Calm before the storm in the markets? This is what can be a spark (OPINION)

The text was created within the framework of the WP Opinion project. Presenting a variety of views from commentators and opinion leaders on major social and political issues.

First, a small memory from quite a long time ago – from 2005. then elections Law and Justice won the Polish parliamentary elections, leading to the formation of a very exotic coalition consisting of PIS-u, Defense and League of Polish Families. Many analysts, myself included, feared that such cooperation would lead to a flight of foreign investors and a bear market. stock exchange (WSE) and the devaluation of the Polish zloty.

However, the WIG20 was found to continue to boom, growing after the election until the financial crisis of 2007-2009, gaining 1,000 points (from 2,900 to 3,900 points) in two years. The zloty was also increasing. At the same time the course EUR/PLN It fell from 3.90 to 3.20. Yes, it helped that Poland joined the EU a year before the election, which attracted foreign investors.

But why did the election results not scare investors? Well, then, more than 18 years ago, I asked one of the managers of foreign investment funds about this. I remember exactly what he answered.

from the moment of Poland's accession European UnionWe don't care about your politics, only the economy and the company's profits will grow regardless of the madness of the politicians – I heard.

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Now the situation is a little different, because we have been in the European Union for 20 years. Moreover, there is a war going on beyond our borders that no one could have imagined 20 years ago. However, our assets (indices on WSE, PLN rates) practically do not react to what is happening in politics. And things are really bad.

Political tensions are rising. postponement of the session of the Seimas, Arrest of Mariusz Kaminski and Maciej Vesik, the PiS protest in Warsaw (as you can see, every opposition has to have its own march), while the Polish financial markets remain flat and unresponsive to rising tensions. Currency rates dance to the rhythm of EUR/USD rate changes, indices on the Warsaw Stock Exchange follow what is happening in global markets, and ten-year bond yields remain close to 5%.

I know that if Justice Minister Adam Bodnar complies with President Duda's request and releases the PiS politicians within the framework of the sentence break (I dare not offer him a difficult decision), these gentlemen will definitely try to enter the Sejm building. The state will make decisions on the budget. It could cause a huge mess, which would make it difficult, but certainly not impossible, in my opinion, to pass a budget bill..

The president can also refer the budget to the body sitting in the building of the Constitutional Tribunal, for example on the pretext that the Sejm is sitting with the wrong composition – without Kaminski and Vesik. In my opinion, this would be a completely pointless step. Advisors of President Duda say about this.

Moreover, neither the opposition nor the government is interested in early elections. The opposition fears that the coalition will be able to override President Duda's veto on October 15, while those in power fear that the current turmoil will subside. Voter turnoutwhich will lead to a worse outcome.

There is another issue worth discussing. This refers to the comments of foreign news agencies, which, although to some extent, influence the behavior of the currency market. The comment was made by the Bloomberg agency, which suggested that the political turmoil, in which Maciej Wąsik and Mariusz Kamiński play the main roles, could destroy “the massive increase in the value of Polish state assets after the October elections”. In addition, the author claims that the storm is draining Poland of money from the National Reconstruction Plan. I think it's terrible. I don't see any mechanism to stop funds from KPO as a result of political unrest.

After all, even if PiS was angelically calm, changes to the justice system (stages in the KPO) would still be vetoed by the president. And this is obvious European Commission Wants to help Poland's pro-European government and will do everything to pass relevant laws – even veto.

Does this mean that investors' liberal approach to the Polish political scene is fully justified? Not at all, because if there were acts of violence, it would disappear instantly. Therefore, this attitude was seriously tested on January 11 during the PiS demonstration, but fortunately the Sejm was not in session and there was no violence. I hope that this will not happen yet, the struggle will be limited to the campaign before the local government elections and only European ParliamentAnd financial markets only follow politics.

Piotr Kuczynski, Xelion investment house analyst