(Bloomberg) —
Warsaw’s stock market tumbled as much as 12.7% on Thursday, the most in almost two years, after Russia launched a military attack on Ukraine.
Clothes retailer LPP SA and other companies exposed to markets hit by the military conflict led the drop. Only Russian companies fared worse on Thursday, with Moscow’s Moex collapsing as much as 45% and wiping out more than $250 billion in stock-market value.
So far this year, Warsaw’s WIG20 benchmark has dropped 10% in both zloty and dollar terms, compared with a 1.3% decline in the MSCI Emerging Market stock index.
LPP, which has bet on expansion in Poland’s eastern neighbors, dropped 24%, most among companies in the WIG20. The retailer shut its 139 stores in Ukraine, suspended deliveries to the country and moved local management from the capital Kyiv to Lviv, a city nearer the Polish border. It hasn’t announced any decisions about its presence in Russia.
Warsaw-listed Ukrainian agriculture producers were hit even more. Kernel SA dropped as much as 35%, while Astarta SA lost 48% at one point. Polish companies with operations in Ukraine, including recruiter Grupa Pracuj SA, started contingency plans to protect employees.
The selloff goes beyond companies exposed to eastern markets, however, with e-commerce platform Allegro.eu SA plunging 20%, Poland’s biggest online marketplace was hit with disappointing earnings and growing investor concerns about consumer confidence at a time of of war in neighboring Ukraine.
Local banks that surged last year thanks to interest-rate hikes also declined, with the WIG-Bank index falling 14%, even as most lenders are not directly present in Russia or in Ukraine.
It’s still uncertain how Russia’s invasion of Ukraine will impact the Polish economy, with analysts debating how much growth could slow and whether interest rates will rise more than expected to quell inflation expectations.
Poland’s job market has benefited from more than 1 million Ukrainians entering the country in past years, a number that could surge if the conflict lingers on.
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