The WSE may record another good year, and the entire region offers attractive valuations, says Robert Brzoza, director of foreign markets analysis at BM PKO BP. It assumes that the most interesting countries in the region in 2026 will be Poland and Greece, and Hungary may also positively surprise investors, but after the elections.
“There is a chance for a good 10 percent increase from current levels”
“We are assuming another good year for the Polish stock market. Maybe we are not as optimistic as a year ago, when we suggested returns of 30 percent, but looking at the discount of the entire market to history or the discount of the Polish market to the media of emerging markets, we see a chance for a good 10 percent growth from current levels,” said Robert Brzoza, director of foreign markets analysis, market strategist and analyst of the CEE financial sector, in an interview with PAP Biznes.
In his opinion, the entire region also continues to offer attractive valuations. It trades at a price/future earnings ratio of around 10.5x, with a dividend yield of less than 5%.
Greece, Poland and Hungary
The largest discount to history (median for the last 20 years) is currently recorded by the Athens Stock Exchange (29%), followed by Hungary (23%) and Poland (10%).
The assumption of the PKO BP Securities Market Strategy for 2026 is that the economy of the Central and Eastern Europe region, as well as Greece, will remain in the so-called “sweet spot”, i.e. in an environment of disinflation and economic growth supported by interest rate cuts.
In the opinion of BM analysts, PKO BP Polska remains the leader among the countries in the region.
“We are still in a good place economically. We are counting on strengthening GDP growth, we assume 3.7% y/y for 2026 thanks primarily to increased investment dynamics, but consumption growth of 3.5% y/y will also be a quite good result,” said Robert Brzoza.
“We also hope that the main contributor to growth rates will be re-rating, i.e. the decreasing cost of capital. We assume that disinflation will continue and will be the strongest in the region, which will result in a reduction in interest rates to at least 3.5% at the end of 2026. We hope that this will result in compression, i.e. a reduction in the cost of capital in the Polish market,” he added.
In his opinion, the situation is similar in the region. For various reasons, the cost of capital in our region is still quite high, which translates into low valuations.
“We assume that the external environment and interest rate cuts should at least slightly weaken the USD, and this was usually correlated with the strength of emerging markets. Investors see that developed markets have become a bit expensive, and valuations depend on whether companies deliver high growth rates. In such situations, there is often rotation and a search for other markets,” said Robert Brzoza.
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In the opinion of the Director for Foreign Market Analysis of the PKO BP Securities Bank, the economic prospects of Poland and Greece are currently the most interesting, and these are the main forecasts for 2026 in the PKO BP Securities Market assumptions.
“Poland and Greece will have the highest expected investment dynamics at the macro level in 2026. At the same time, Poland and Greece have the lowest shares of investment in GDP. Our weakness is primarily investment in R&D. Even compared to the region, we look weak,” he said.
As the PKO BP Securities Market analyst points out, Poland has a relatively weak labor market, and the low increase in the minimum wage is, on the one hand, a small brake on consumption, but on the other hand it has a disinflationary effect on services and may allow some companies to improve their margins in 2026.
He also draws attention to the fiscal deficit assumed for 2026 at 6.5%. and growing debt servicing burden despite a slight tightening of fiscal policy.
“The cycle of interest rate cuts supports the economy, but it has already become significantly de-leveraged in recent years, so the impact of the cuts on the household and corporate sectors will be much smaller than in the past,” said Robert Brzoza.
They can join the group of leaders in the region Hungarybut probably only after the elections.
“Hungary is a very cheap market, but we did not decide to select Hungarian companies due to the zero-sum political situation. The government has recently significantly accelerated fiscal and social spending and it can be seen that this was reflected in the polls,” said Robert Brzoza.
“The cost of capital for Hungarian companies is the highest in the region, so these companies are objectively cheap because of the high interest rate used to discount future profits. If the opposition wins, European funds will be unblocked. In such a situation, we would expect the cost of capital to drop by at least 1-2 percent, which would result in a high valuation increase of several percent,” he added.
Risk factor: Ukraine and the USA
Among the main risk factors, Robert Brzoza mentions the war in Ukraine, because the basic market scenarios predict rather positive outcomes, and the variant of potential escalation of the conflict is not properly appreciated.
“It seems to us that when it comes to a potential solution to the crisis in Ukraine, a lot of good things are already in the prices,” he said.
Another risk factor is the possible deterioration of the economic situation in the United States. Analysts point to the weakening labor market there. The further stability of the artificial intelligence boom is also questionable – the announced huge investment outlays do not match the forecast revenues.
“The main dealer on the Warsaw trading floor is still the foreign investor”
In the opinion of PKO BP Securities Bureau analysts, the main player on the Warsaw Stock Exchange is still a foreign investor, as purchases of shares by TFI and OFE are still small.
“We have NBP data on portfolio foreign investments and on this basis we can estimate annual foreign investments in Polish shares at approximately PLN 12-13 billion per year, and in good years it was even PLN 20 billion. Of this, several low billions of zlotys were passive flow, for which Poland's positioning in the entire region is important,” he said.
“In November, PKO BP Securities organized a conference for investors in New York. Several of the largest Polish companies came with us. There was considerable interest in our market. Poland still looks interesting compared to emerging markets, and we are still in this basket,” he added.
We are counting on OIC
PKO BP Securities Bureau analysts have a positive attitude towards new proposals related to regular saving, i.e. Savings Investment Accounts.
“We hope that the success of the Swedish model will be repeated. We count on OKI and various products related to investing in the capital market, but for now we only have foreign investors,” he said.
Top picks for 2026
The top picks of BM PKO BP analysts for 2026 include Pekao, Santander BP, Eurobank, Piraeus Bank, CTP, Allegro and LPP from large companies, as well as BNP Paribas BP, Benefit Systems, Cyfrowy Polsat, Diagnostyka, Asseco SEE, Rainbow Tours, Murapol, Mo-Bruk, Oponeo and Selvita from the group of medium-sized companies.
“As for the total (adjusted) profits of the Polish universe, we forecast that it will not change significantly in 2026. In turn, in smaller and medium-sized companies we may see double-digit profit dynamics.” – says Robert Brzoza.
The sectors preferred by PKO BP Securities analysts are banks, health care, e-commerce and consumer companies, as well as developers. All of these sectors offer both attractive valuations and solid performance prospects.
“If a foreign investor wants to buy the market, in most cases he buys it through banks,” said Robert Brzoza.
He points out that banks in the region still have 16 percent. discount on the price/earnings ratio in relation to global banks, including European ones. The discount to the historical median is 20%. In his opinion, banks are overcapitalized, ready for takeovers and with the prospect of increasing their commission income.
In the case of clothing trading companies, there is a clear discount to history and to global competitors. The discount of companies from this sector to the historical average reaches 20%.
“In the case of the food trade sector, there is no longer a valuation discount to its history, nor is there a discount to global peers, which are already quite expensive. The same in the energy and oil & gas segments – we do not see a discount there,” he said.
“Most sectors in the world are quite expensive in relation to their history: technologies, software, industrial and defense companies. However, there is still an appreciation discount in the case of health care and insurance,” he added.
Healthcare companies can also take advantage of demographic trends.
“There has been a lot of talk lately about unfavorable demographics in Poland and the region. This is true when it comes to estimated fertility rates. Poland and South Korea are at the bottom of the pack, with the average age of the population in South Korea being higher, we are 7-8 years behind them,” said Robert Brzoza.
In his opinion, companies whose business is located in large cities and which focus on services and goods meeting the needs of the growing middle class, offering quick purchases and in modern distribution channels (Żabka, Benefit Systems, Medicover, Allegro, Answear.com) can benefit from demographic changes. Among the potential losers of demographic trends, analysts at BM PKO BP point out Pepco and Dino.
The real estate sector, in turn, offers resurgent demand and attractive company valuations.
“Poland and Greece also have a well-developed IT services sector, which was probably one of the factors encouraging foreign investors to take over listed service integrators. For many years in Poland and Greece, the IT services sector has been a solid engine of growth for the entire economy. This is our service equivalent of AI and new technologies,” said the director of foreign markets analysis at BM PKO BP.
PKO BP Securities Bureau analysts summarized the largest ABB transactions in recent years and quarters (sale of shares of companies listed on the WSE through accelerated book building).
“The fourth quarter was record-breaking, over PLN 8 billion in transaction value with the lowest discount to the market price in the last three years. There was interest both from abroad and from domestic investors, which proves the strength of demand,” said Robert Brzoza.
“There is still a large supply overhang, but this will gradually be absorbed by the market. Each transaction de facto increases the attractiveness of our market in the long term. Companies that are in supply baskets, up to a certain point, lag behind the market a bit and this is, paradoxically, also a source of valuation discount. One day, however, this overhang will disappear,” he added.
Analysts also point to potential changes in the composition of indices on the Warsaw Stock Exchange during 2026.
“We see a possible entry into the WIG20 index by Asseco Poland, which could replace Orange next year. Perhaps, if Pekao and PZU merge, Tauron or Benefit could enter WIG 20, and when it comes to international indices, according to our estimates, Asseco Poland could replace CCC in the MSCI Standard indices,” said Robert Brzoza.
Piotr Rożek (PAP Biznes)
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