According to still not final data the Civic Platform (PO) came out with a whopping victory over the conservatives from the PiS in Sunday’s general elections. With just over 41% of votes the PO could count on roughly 205 seats in the 460 member parliament. The PiS in turn, with its 32%, will be the largest opposition party, along with the social democrats (LiD) at 13%. The last party likely to enter the parliament is the Polish Peasants Party (PSL) (some 9%), which with its 36 mandates, seems the most likely coalition partner for the liberals. These results are according to official data after counting some 74% of votes. The turnout was above 53%, much higher than some 41% in the last elections in 2005.
Our view: The preliminary results that came yesterday evening based on the opinion polls conducted outside voting stations were even more favorable for Civic Platfom indicating that PO could even have the absolute majority necessary to form a government. Now it looks that the coalition with the PSL is the most likely (and market friendly) option, however the majority may be rather frail (current status is that both parties would have some 240 seats versus necessary majority of 231). Markets should greet the outcome of the elections warmly, however, given the heavy pre-positioning last week, we doubt whether the zloty will extend the recent rally significantly today. Bonds may gain for longer maturities though and equities may eventually get a positive boost as well as both had underperformed the zloty recently.
Positive impact on IT companies: We believe the outcome of the parliamentary elections should be positive for the stock market. We would expect some positive impact on IT companies, where we would expect a more reasonable treatment of IT companies in public tenders and most of all decision taking regarding the large IT projects. The state informatisation plan encompasses PLN 3.5bn outlays for IT spending which now are more likely to materialise. The companies that could benefit encompass: Prokom/Asseco, ABG SPiN, CoMArcha and Sygnity.
Management changes in state-owned companies: We expect a slightly positive impact on the companies, where new management would be put in charge, in particular at PKN Orlen and KGHM. We do not expect any major changes at Lotos and PGNiG.
Speeding up of privatization: After years of stagnation, we expect the speeding up of privatization of state owned companies, in particular, in power generation and distribution sector.