The capital market is the foundation – Business at INTERIA.PL

Maciej Wośko and Stanisław Koczot, Gazeta Bankowa: Will the employee investment plans strengthen the Warsaw Stock Exchange, increase their attractiveness for investors?

Paweł Borys, President of the Polish Development Fund : – Of course. However, first, the stock market needs to be closer to the capital market and Poles and politicians. It simply lacks understanding of the importance of the capital market in the economy. This is not a casino, but real assets, real businesses. You can win, sometimes lose, on such a market as in any investment. Likewise with commercial operations – one manages to develop business, others does not. There is always a risk associated with operating in the market.

– One thing to keep in mind: the capital market is the foundation of what is called the construction of a social market economy in the Polish constitution. In this model, the allocation of funds takes place via the capital market, which should guarantee high standards of corporate governance and act in accordance with the principle of corporate social responsibility. It should transfer savings to the best companies, ensure their development and thus create jobs and technological progress.

This is true, but the debate on this topic rarely touches the subject of the social market economy. There is a lot of work to be done …

– I realize we are talking here about how it should be, and often the reality is different. But the role of public policy should be to optimally shape the structure of the economy through the prism of development. In discussing this subject, we can not reduce the problem to the actions of capital market lobbyists who are trying to create risky solutions for the Poles. We must break with such a message.

This is not true. The richest countries in the world: the United States, Great Britain, the Netherlands have created the most developed capital markets. Germany, France and Japan operate in a slightly different pattern, but all are trying to develop the capital market since the 2009 financial crisis. These countries have realized that the model of funding for innovation or infrastructure has changed, that these sectors are taken over by the capital market, because banks will not take the risk of financing an innovative company or a very long-term investment. In the case of Poland, the question is fundamental: we must build a positive image and increase the credibility of the capital market among Poles and politicians, while being aware of the risks involved.

Which, after all, is also not deprived of the banking market …

– … and which annually credits bad debts worth billions of zlotys. In the capital market, on the list of more than 600 companies, one, five or even ten companies may have problems. The role of supervisors, supervisory boards and auditors is to minimize the risk of fraud. On the other hand, the market risk that makes one company succeed in achieving commercial success and not the other will subsist. With such a large capital market, the number of frauds in the past 25 years has not been too high. Capital market support should be the conscious objective of the state's economic policy as one of the essential elements of a long-term vision of increasing potential Development Plan

Can Employee Investment Plans Contribute to it?

– The main goal of the CCP according to the so-called Morawiecki's plan is to improve the financial security of Poles in their old age. But of course, in my opinion, they are also the key lever to create this market in the long run. The capital market needs long-term savings. Long-term capital in the world is provided by pension funds and insurers. In Poland, insurers have to a small extent participated in this model, pension funds, that is, OFE, have provided this capital, now more … If we want a local system of financing of the economy, we must develop the capital market. We have the opportunity – if we are able to effectively implement various initiatives – to become an important mid-market at European level and a leader in the region of Central and Eastern Europe.

What does this mean for the stock market?

– In exchange, we should seek our specialization. It can be, for example, a favorable market for small and medium-sized enterprises, good for innovative technology companies. There are many initiatives in Poland that will allow new companies to enter the stock market, such as venture capital funds.

Since the stock market is such an important institution for the economy, is it a good idea that it is publicly traded? Is there another institutional solution for the WSE?

– The stock market listing increases transparency and improves efficiency. On the other hand, I agree with the view that the stock market has primarily an infrastructure function, especially at the stage where the Polish capital market is currently located. It is more important that issuers, market participants have low costs than the stock market to pay high dividends. Personally, I think that there is more argument for the Polish stock market to be listed than to be listed. I think the priorities are different now. We need to conduct the financial policy of the stock market in an economical way, but if we build a market, the priority should be the low level of costs associated with the operation of the infrastructure. This is more important than the dividend.

Shareholders are happy that profits are high …

– … but it's a short-term approach. If in a few years it turns out that the Warsaw market is marginalized, there is no new business, the capital goes abroad, then the value of dividends and shareholders will only be not high

So, you think the WSE should leave?

– I would be careful in this respect, I do not want to submit postulates. However, I am more inclined to assert that it is more important than the dividend that the cost of stock market infrastructure be as low as possible, but the WSE management sets its strategy and I believe that it will do it professionally and consistent with the overall strategy of the Ministry of Finance. 19659004] And how does it work in the West? Scholarships are listed there and at the same time fulfill their infrastructure tasks.

– It works very differently. Stock markets today – on the one hand – technology, on the other hand – risk management skills (the stock market, through the trading system, gives you the confidence to conclude transactions) and – thirdly, the information that makes transactions transparent. The stock market is effective when it has modern technology, advanced risk management tools and that it provides relevant information to market participants, while being an innovative product . The stock exchange board has a lot of work. The different areas, from the bond market to money market derivatives, are rather weak in Poland. The capital market strategy should focus on strengthening the institutional infrastructure, namely the stock market, KDPW, and the introduction of some legal solutions. This, of course, is not enough. This must accompany the strengthening of the long-term investor base. We can have good infrastructure, but if there is no domestic savings in the long run, the capital market will not work. On the other hand, when we have savings, but poor infrastructure, it will not be good either. These two elements must overlap.

What is the significance of PPK in the context of EU funds? And what will be the role of the Polish Development Fund? The negotiations on the EU budget have just begun. Brussels will have less money for us.

– Prime Minister Mateusz Morawiecki, while developing the strategy on new financial tools, said among other things that other funds of the European Union will contain more financial instruments than other financial instruments. previously: capital, repayable, guarantees, loans … Therefore, BGK is needed, PFR is needed to be able to implement them. These instruments will be much more than subsidies. Some countries in our region are not prepared for this.

PFR advises them, helps to build such instruments. Countries are already aware that the situation is changing, but they are not ready for it. And how can this end? Well, they will give the management of financial instruments in Luxembourg. And we want to manage them locally because it's the most efficient. This is why an institution like PFR is very necessary.

There will be less of that money …

– … so you have to be able to replace them by your own means. In this case, we have two components at our disposal:

PFR Group, or development institutions, and an increase in the level of domestic savings, which will increase national resources that can contribute to investments. Ernest Pytlarczyk from mBank prepared an analysis in which he showed how the size of the EU funds intended for Poland would be reduced. In the years 2024-2025, there will be a sharp drop in the influx of net money from the EU, at some point they will no longer play any role. Due to the magnitude, only the potential flow of domestic savings generated by the employees' capital plans can replace them.

We can not wake up in a place where EU funds will deplete, there will be no local savings in the long run and we will have to finance investments in modern infrastructures or innovations all the time.

In this situation, there will be no choice but the need to borrow abroad. It is best to avoid such a situation and create a model that increases the level of domestic savings. Thanks to it, there will be funds that will constitute a long-term capital complementary to the banks and will allow investments in the economy.

Maciej Wośko and Stanisław Koczot spoke

https://www.alumo.pl/