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Poland’s inventory market has emerged as one of many world’s top-performing bourses this yr, helped by the nation’s comparatively insulated place from the worldwide commerce battle and an anticipated increase from neighbouring Germany’s fiscal “bazooka”.
The benchmark WIG Poland index has climbed 28.6 per cent yr thus far — regardless of slipping on Monday after an unexpectedly shut first-round presidential vote — inserting it forward of different strongly performing markets similar to Chile and Greece. In distinction, the US’s benchmark S&P 500 is up about simply 1 per cent.
The rally has been pushed by a “significant inflow of foreign capital”, based on Tomasz Bardziłowski, chief govt of the Warsaw Inventory Trade, because of Poland’s wholesome economic system in addition to the fairness market’s rising dividend payouts and relatively low valuations. Polish shares commerce at a 15 per cent price-to-earnings low cost to the MSCI Rising Markets index.
The market has additionally proved widespread because of the truth that about three-quarters of Poland’s commerce is carried out inside the EU. That has made it much less weak than others to the commerce battle launched by US President Donald Trump and a extra enticing wager for some traders.
“The market is small enough for foreign capital movements to have a visible impact,” mentioned Piotr Arak, chief economist at Poland’s VeloBank. “Trump’s trade war also diverted capital flows from the US to emerging markets like Poland and parts of Latin America less affected by tariffs.”
The WIG index is about $135bn in measurement, in contrast with $2.9tn for the UK’s FTSE 100 and greater than $50tn for the S&P.
Poland, which minimize rates of interest this month for the primary time since Prime Minister Donald Tusk returned to energy in 2023, can be benefiting from an enormous improve in deliberate spending by neighbouring Germany, its largest buying and selling accomplice.
Germany’s struggling economic system sparked jitters in Warsaw final yr. However these considerations had given solution to hopes for a constructive knock-on impact for Poland from the “bazooka fiscal stimulus” bundle drafted by the brand new authorities in Berlin, mentioned Kamil Stolarski, head of fairness market analysis at Santander Poland.
The Polish economic system grew 3.8 per cent yr on yr within the first quarter of 2025, the second-fastest fee within the EU after Eire and nicely above the bloc’s common progress of 1.4 per cent, based on Eurostat knowledge.
In the meantime, analysts forecast that earnings per share for Warsaw-listed firms will develop on common by about 10 per cent in 2025. Monetary companies firms, which account for two-fifths of the WIG, are elevating dividends after posting bumper earnings. Polish banks had mixed income of 42bn zlotys ($11bn) in 2024, up from 27.6bn the earlier yr.
Poland ought to “remain resilient during these turbulent times, thanks to its diversified economy, a large domestic market and limited direct trade exposure to the US”, mentioned Beata Javorcik, chief economist on the European Financial institution for Reconstruction and Growth.
Poland may have the strongest economic system this yr among the many EU’s previously Communist international locations, with annual progress of three.3 per cent, based on the EBRD’s newest forecasts.
Home politics have additionally been encouraging traders. The return of Tusk and his pro-EU coalition has unlocked billions of euros in beforehand frozen EU funds. The federal government has begun deploying this cash — largely on infrastructure and vitality transition tasks — because it seeks to shift away from the nation’s reliance on coal.
Shares in state-controlled vitality teams have surged, with oil firm Orlen up 53 per cent and utility PGE rising 56 per cent because the begin of the yr.
The WIG misplaced 0.8 per cent on Monday, as consideration now turns to the presidential run-off election on June 1. Rafał Trzaskowski, who’s Tusk’s candidate, is dealing with an unexpectedly tight contest towards Karol Nawrocki of the opposition Regulation and Justice (PiS) social gathering, after Trzaskowski solely narrowly gained the primary spherical on Sunday. A Trzaskowski victory within the run-off would allow Tusk’s authorities to proceed with long-delayed reforms beforehand blocked by outgoing president Andrzej Duda, a PiS appointee. However a Trzaskowski defeat is seen as prone to destabilise Tusk’s coalition and will even pressure early parliamentary elections.
“A victory of the candidate of Tusk’s party would be supportive for investors’ sentiment towards Polish assets, while a defeat could provoke new concerns about Poland remaining on the reform path,” mentioned Piotr Bujak, chief economist at PKO BP, Poland’s largest financial institution.
Each presidential contenders have positioned nationwide safety on the coronary heart of their campaigns, echoing Tusk’s November warning concerning the “serious and real” threat of worldwide battle. But traders have not too long ago targeted as an alternative on Trump’s diplomatic efforts to barter a truce between Russia and Ukraine. That might place Poland as a strategic hub for Ukraine’s eventual reconstruction.
“I think that one key reason for the market rise is that investors are really betting on peace in Ukraine,” mentioned Andrzej Kubisiak, deputy director of the Polish Financial Institute, a think-tank.
“Poland’s strong economic showing in the EU is boosting investor confidence, though the outcome of peace talks still poses a risk to further gains on the Warsaw exchange.”
