Although the decision to include Poland on the list of developed nations according to FTSE Russell classification was made a year ago, on Monday the country officially became a member of the group which includes 24 other nations the likes of the US, Japan and Germany, Hong Kong and Singapore.
After 25 years as an emerging market, 37 Polish companies have been named to be included in the global FTSE Russell Index in recognition of the...see more
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Poland is the first CEE country to join the group of developed countries, having been placed on the observation list seven years ago. The reclassification of Poland’s status was decided by the norms and laws of the business sector, its infrastructure and the quality of its capital market.
“The Warsaw Stock Exchange uses a state-of-the-art trading system and its listed companies meet the highest standards of corporate governance and disclosure requirements. Furthermore, the dynamic development of the Polish economy represents an opportunity for international investors. Poland’s upgrade to Developed Market status is a challenge, which we are ready to face,” said Marek Dietl, chairman of the Warsaw Stock Exchange.
A total of 37 Polish companies were also recently named to be included in the global FTSE Russell Index in recognition of the strength of the Polish economy.
Delighted to welcome @GPW_WSExchange to open trading @LSEplc this morning, celebrating their promotion to Developed Market status within @FTSERussell global equity benchmarks https://t.co/9WICIfhl9I pic.twitter.com/eHiJdTtSOB— London Stock Exchange Group (@LSEGplc) 24 September 2018
The FTSE Russell rating comes at an opportune time for the Warsaw Stock Exchange and it will now be a must for foreign investors who follow the index to invest directly in the stocks of the WIG 40. For the big kids on the block – oil giant Orlen, Poland’s largest bank PKO Bank Polski and another score of companies – it will mean that they will also find it easier to raise finance and most likely at better rates. They will also be open to more transparency and the management decisions taken will be open to scrutiny from more corners. The 37 companies included in the market may be encouraged to increase their free float, on the market as well, benefitting all investors.
While the rating has been billed as a reclassification of the country, a telling section of the press release from the Chairman of the exchange, Marek Dietl, notes that for the Morgan Stanley Index, MSCI, Poland remains an emerging market and therefore not yet considered as being investment level.
Mr Dietl says this is an advantage, as the Polish stocks on the MSCI are seen as being the fourth most popular, despite only accounting for 1.2 percent of the total capital of the index.
In terms of sovereign bonds, however, Poland will continue to be treated as an emerging market and will still be dealt with by teams which also cover the Czech Republic and Hungary. For the credit rating agencies as well, Poland’s rating lies further down the list than the big boys. S&P gives Poland BBB+ positive, Moody’s rates the country at A2 stable, and Fitch at A- stable. The A- is the 6th from highest possible rating, and so Poland’s is paying considerably more for servicing its debt than its peers in the EU.