Poles Regain Stock Market Zest as Dino Polska Soars in Debut

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  • Polish brokerages are opening new accounts as volumes grow
  • Retail traders are boosting trading volumes on smaller stocks

Polish supermarket chain Dino Polska SA, whose shares started trading in Warsaw on Wednesday, is giving local investors an appetite for stocks again.

While most of the demand for Dino Polska’s 1.65 billion-zloty ($420 million) initial public offering came from foreign funds, individual shareholders pocketed 5 percent of the stock in the run-up to its debut, the maximum allowed for that investor contingent. Demand from this segment outstripped supply by 75 percent, according to the Krotoszyn-based company. The shares soared 8.5% to 37.42 zloty as of 12:20 p.m. in Warsaw, with volume traded at 249 million zloty.

Once lured by IPOs in state-owned enterprises as the former People’s Republic sold prized assets to the public and moved to a market economy, retail investors in Poland have turned their back on stocks in recent years. Brokerages closed 22,000 of unused clients’ accounts in 2016, according to Polish clearing and depository house KDPW. That contrasts with a 30 percent increase to 1.44 million in 2010, when shares in PZU SA insurer were sold in the country’s biggest IPO.

The number of IPOs in Warsaw peaked at 81 in 2007. Last year, 19 companies entered Warsaw’s main equity market. Dino’s listing takes the level to 5 so far this year. Retail investor participation in Warsaw trading dropped to a record low of 13 percent last year. Disillusion set in in 2011 with the listing of coking coal miner JSW SA, whose shares fell in the aftermath, never regaining the level of the offer price.

A 15 percent surge in the WIG20 Index this year, one of best performances globally, is sparking renewed interest with brokerages adding 2,900 of new accounts, marking the first increase since 2010, according to KDPW. In March, investors in Warsaw traded stocks worth 24.6 billion zloty, 44 percent more than a year ago, reaching levels last seen in the August 2011 selloff.

“The market rebound and persisting low interest rates have brought investors back to the stock exchange,” said Andrzej Zajko, deputy head at PKO Bank Polski SA brokerage. “Many of them used to trade equities in the past, and started to see new opportunities to make a profit. If equities remain strong, we should see more Poles coming to stocks.”

While only a fraction of the new flow stems from retail traders, these have boosted trading volume in smaller companies not tracked by foreign funds, such as Polimex-Mostostal SA. The builder, with a market capitalization of less than 2 billion zloty, became the sixth most-traded stock in Warsaw last month with a 6.5 percent share of the market’s total turnover.

More companies plan to follow Dino Polska and Griffin Premium RE real estate fund, which listed earlier in April. Debt collector GetBack SA, mobile-phone maker Maxcom SA and Raiffeisen Bank Polska SA are among companies that plan to sell shares this year.

“Today’s debut makes our market more diversified towards industries investors vie for such as retailers that benefit from strong domestic demand,” Jaroslaw Grzywinski, acting Chief Executive Officer at Warsaw Stock Exchange, told reporters on Wednesday. Poland’s biggest retail chain Biedronka is owned by Jeronimo Martins SPGS SA of Portugal. Shares in Eurocash SA, Dino’s biggest Warsaw-traded peer, rose 2.1 percent.

Grzywinski expects 2 to 3 additional major IPOs in Poland this year.