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Remi Adekoya: Currently, a total of 197 firms are listed on the alternative NewConnect (NC) bourse. There were 86 debuts last year, a record, but this January alone the exchange has already seen 13 debuts. It seems to be looking like another record year. Will it be?

Bogusława Cimoszko-Skowrońska: The success of the NewConnect exchange has exceeded everybody’s expectations. The number of entities present on it has exceeded our most optimistic forecasts and 2011 is definitely going to be the year of NewConnect. That’s not only because of an increase in the number of firms listed, but also because of a qualitative jump in its participants, meaning much larger entities. Until recently, people considered NC a place for start-ups where you went if you wanted to raise zł.1 million or zł.2 million.

But last year, two companies managed to raise over zł.20 million each on the exchange and I think we will see much more such offers this year. In order to raise that kind of money, you need to attract institutional capital. We see a marked increase of interest in the [NewConnect] bourse on the part of such institutional investors.

Mid-caps are also increasingly looking towards the exchange as a viable source for raising capital. This could be the future path for Polish mid-caps, first a debut on the NC and then, later on, on the WSE.

Some say the government’s proposed changes to the pension system – by reducing the amount of money which open pension funds (OFEs) manage – will reduce the flow of capital on the exchanges significantly. Do you agree?

It is very unfortunate that the government made that move under the pressure of the budget deficit. Those who want the changes argue that the OFE system is costing us too much. But the question is: relative to what? For sure there are costs to the current system, but what about this vibrant group of investors who have been investing in the capital market? How many jobs were created by them? The government’s calculations were simplistic, political and wrong for the future of Poland.

The private pension funds were a stable source of cash flow for the WSE and the new situation may mean it will not be as attractive; people will look more towards the UK or the US.

The NCIndex grew 30 percent year-on-year in 2010, double the growth rate for the WSE’s main index, the WIG, in the same period. Do you expect that dynamic to continue?

Yes. The year 2011 will be the year of SMEs in Poland – provided the economy continues to do well. When there is economic growth, SMEs grow much faster than big firms. Another major reason I expect them to do well in the coming years is because of the situation in Germany. Its exports are rising, production is vibrant, it is largely done with the issue of national reunification, it has lowered its tax base and enjoys good relations with Russia. A lot of Polish SMEs deliver to Germany, so as long as Germany is doing well, our SMEs will do well.

WSE president Ludwik Sobolewski has suggested opening country- or region-specific indices. Is that a good idea?

I think sector-specific indices might be more attractive for investors right now. Maybe later, if people want exposure to a particular country, then such an index might be a good idea. For example, during the crisis, when Poland was a green island, a lot of Western investors were coming to banks saying, “I don’t want a CEE index, I want a Poland index.” They wanted to be involved with Poland, but not with Hungary, for example.

From Warsaw Business Journal by Remi Adekoya