There is no fuel for growth on the WSE

[shukla7789]

Since November, all the main indices on the Warsaw Stock Exchange have been gradually falling to lower and lower levels. Some analysts claim that we are observing a sideways trend; others say a bear market. If we look at the indices, the second option seems to be closer to the truth.

A growing bear market?
On the WIG index chart from 1 year back, we see lower and lower levels of subsequent "bottoms" and "peaks". This pattern fits perfectly with the progressing bear market. Subsequent waves of growth end at lower and lower levels. And the periods of declines that follow them push the indices lower and lower.

Not all indexes have given up?
As usual, we are dealing with a discrepancy in the scale of el salvador whatsapp database on individual indices. The peak period from the fall of last year is similar for each of them.
The classic definition of a bear market is a decline of the index by at least 20% from the peak. If we accept this condition for analysis, then the MiS80 index is currently in a bear market.

Source: Bankier.pl website
Source: Bankier.pl website



WIG, which groups all companies from the main market, fell from the peak to the last bottom by about 17%, while MiS80 by over 23%.
It is worth mentioning that MiS80 groups small companies and is the successor to sWIG80. During the previous bear market in 2007-2009, small companies were also the first to indicate a downward trend as the main one (losing the most in a short time and continuing this trend). The mechanisms are similar to those I read in a book about Forex for beginners and intermediate investors .

Objective reasons for the weakness of the WSE
Each bear market period is characterized by the accumulation of several factors that contribute to the depreciation of stock prices. They can be divided into, for example, economic and political, although both types are related. For example, the partial nationalization of Open Pension Funds by the government limited the inflow of capital to the market. Political instability and then the war in Ukraine weakened our region and the inflow of foreign capital. Sanctions imposed on Russia caused declines on the Moscow stock exchange. Russia, in turn, introduced restrictions on the import of food products from Poland. The embargo therefore indirectly hit domestic food producers, focused on the eastern market.
Of course, the basic reason, or more precisely the cause of each bear market, is a natural period of weakening in the economic cycle. Confirmation of this thesis can be easily found in macroeconomic data for Poland. A weakening of the dynamics of industrial production calculated year on year and a drop in the PMI of industry (even below the neutral 50 points). It seems that the macro data leaves no illusions about what stage of the economic cycle we are in. The bear market seems to be logically justified and is now taking its toll.