|The blue chip WIG20 has lost 7 percent since the PM presented pension system changes|
Polish stocks slumped and government bond yields rose to the highest level in almost a year as the government unveiled changes to its pension system that stopped just short of full nationalization of private pension funds.
The government will redeem all the treasury bonds held by the private pension funds (OFEs), which stand for 51.5 percent of their assets. Their value will instead be recorded within each insured person’s individual account at the state social security system.
The proposal will allow people who until now have been members of private pension funds to decide if they want their pension savings to remain in OFEs. If they don’t submit a written declaration to that effect, their assets will be automatically transferred to the state-run social security system.
On the day of the announcement, the WSE experienced a day of strong sell-offs during which WIG20 lost 2.5 percent). The blow was even greater on Thursday as the effects of the government's OFE plan announcement continued to resonate.
Investors ignored the fact that other markets were showing growth, including German DAX and the French CAC40. At the end of the day, the WIG20 lost 4.6 percent, mWIG40 4.3 percent and sWIG80 3.6 percent. Altogether, the blue chip WIG20 index lost 7 percent over the past two days.
These drops were accompanied with the high value of trade. On Thursday it exceeded zł.2 billion, compared to the normal levels below zł.1 billion.
From Warsaw Business Journal
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