NewConnect, safe and sound?

The effects of the global financial crisis have not been limited to the Warsaw Stock Exchange. NewConnect, the WSE's alternative trading platform, has also been hit and some market observers have expressed concern about its health.

NewConnect launched in August 2007 as a platform for smaller firms with strong growth potential. The exchange has stable foundations but did not have the luck to experience the bull market, Ludwik Sobolewski, the president of the WSE, was quoted as saying in Ipo.pl's Raport NewConnect 2008.

As of November 27, the market had attracted 78 companies and had a capitalization of zł.1.3 billion. However, only 26 percent of individual investors in Poland have invested on NewConnect, according to research by the Polish Individual Investors Association.

According to Emil Stępień, the head of NewConnect's development department, the market is not facing any crisis. "The NewConnect market is functioning very well in these times when there is a lack of prosperity," he told WBJ. He added that the foundations of the exchange remained very strong and stressed that stock market worries in Poland resulted mainly from external factors.
"The NewConnect market will definitely continue to develop," he declared.

The gloom on both NewConnect and the main WSE market is, to a large extent, a media invention, Stępień said. "There is a lot of potential for the media to get the information right," he said with a touch of irony, noting that exaggeration in the media had contributed to the escalation of the crisis. "The

media give publicity to negative things, ignoring the positive ones," Stępień said.

The WSE's Sobolewski also said that he had "plenty of objections" about the media, although he noted that it plays an important role in explaining financial markets and bourse mechanisms. "The populist media create frustration and anger," he said last week at the NewConnect Club.

Konrad Kiedrzyński