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Polish stock markets have emerged as one of the world’s top performance bruises this year, and were helped by a relatively insulated position from the World Trade War and an expected boost from the neighbouring German fiscal “bazooka.”
The Benchmark Wig Poland Index rose 28.6% per year, despite slipping on Monday after an unexpected first-round presidential vote, but went ahead of other strong-performing markets such as Chile and Greece. In contrast, the US benchmark S&P 500 has grown by around 1%.
According to Warsaw Stock Exchange CEO Thomas Balziwowski, the rally, the rally is driven by a “severe influx of foreign capital.” Polish stocks are trading at a revenue discount from a price of 15% against the MSCI Emerging Market Index.
The market has also proven popular due to the fact that around three-quarters of Polish commerce are conducted within the EU. It is a bet that is less vulnerable to the trade war launched by US President Donald Trump and is more attractive to some investors.
“The market is small enough to make a visible impact for the foreign capital movement,” said Piotruarak, chief economist at Belobank in Poland. “Trump’s trade war also diverted capital flows from the US to emerging markets like Poland and parts of Latin America, and was not affected by tariffs.”
The WIG index size is around $135 billion, but it’s 2.9tn for the UK FTSE 100 and over 50tn for the S&P.
Poland cut interest rates for the first time since Prime Minister Donald Task returned to power in 2023, but also benefited from a massive increase in planned spending by its biggest trading partner, neighboring Germany.
Germany’s struggling economy sparked anxiety last year in Warsaw. However, these concerns wanted a positive knock-on effect for Poland from the “Bazooka fiscal stimulus” package drafted by Berlin’s new government, said Kamil Strursky, Santander Poland’s head of stock market research.
The Polish economy rose 3.8% year-on-year in the first quarter of 2025. This is the second fastest rate in the EU after Ireland, according to Eurostat data, and is well above the average growth rate for the block at 1.4%.
Meanwhile, analysts predict that earnings per share for companies listed in Warsaw will increase on average by around 10% in 2025. Financial services companies, which account for two-fifths of wigs, are increasing their dividends after listing bumper revenues. Polish banks combined profits of 42 billion Zlotys ($11 billion) in 2024, up from 27.6 billion the previous year.
Poland “needs to remain resilient in these turbulent times thanks to its diverse economies, large domestic markets and limited exposure to direct trade to the US,” said Beata Javorcik, chief economist at the European Bank for Reconstruction and Development.
According to the latest EBRD forecast, Poland has the strongest economy of the previous Communist countries of the EU this year, with annual growth of 3.3%.
Domestic politics has also encouraged investors. The return of Tusk and his pro-EU coalition has unlocked billions of euros on previously frozen EU funds. The government has begun to deploy this money primarily to infrastructure and energy transition projects.
Stocks in the state-run energy group have skyrocketed, with oil company Olen rising 53% and utility PGE rising 56% since the start of the year.
Wig lost 0.8% on Monday. This focuses on the June 1st presidential election, so after Trzaskowski narrowed in the first round on Sunday, Tusk candidate Rafał Trzaskowski faces an unexpected close contest of Opposition Law and Justice (PIS) Karol Nawrocki (PIS). Trzaskowski’s victory in the spill allows Tusk’s government to advance the long-standing reforms previously blocked by PIS appointee President Andrzej Duda. However, Trzaskowski’s defeat is likely to destabilise Tusk’s coalition and is even seen as encouraging an early parliamentary election.
“The victory of the Task Party candidate will support investors’ feelings about Polish assets, while the defeat could raise new concerns that Poland remains reformed,” said Piotr Boujac, chief economist at PKO BP, the largest bank in Poland.
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Both presidential candidates place national security at the heart of their campaign, reflecting Tusk’s November warning about the “serious and realistic” risks of a global war. However, investors have recently focused on Trump’s diplomatic efforts to negotiate a ceasefire between Russia and Ukraine. This could position Poland as a strategic hub for Ukraine’s ultimate reconstruction.
“I think one of the key reasons for the rise in the market is that investors are really betting on the peace in Ukraine,” said Andrze Kbisiak, deputy director of the Polish Economic Research Institute, a think tank.
“While Poland’s strong economic show in the EU has boosted investors’ confidence, the results of the Peace Conference still pose a risk of further profiting the Warsaw exchange.”
