The end of record profits on state giants? Santander TFI presents a new strategy on the WSE
In the domestic market, Santander TFI experts focus on the segment of small and medium-sized companies that can benefit from the continuing high GDP growth rate. In their opinion, a factor supporting the valuation of risky assets is loose fiscal policy.
“Especially the historic change in Germany in this respect should support economic growth in the region, creating a more favorable environment for Polish companies. Moreover, Poland is entering an accelerated phase of spending funds from the EU Reconstruction Fund (KPO), which should further stimulate the dynamics of the economy, and thus the results of companies,” wrote the Santander TFI report of January 12, devoted to the summary of last year and prospects for 2026.
According to the managers, the above factors, combined with the continuation of the dividend payment policy, will provide investors with a stable cash flow. They remind us that in 2025, the market believed in the lasting improvement of corporate governance in state-owned companies, and the average rate of return for 12 State Treasury companies listed on the WSE was +59%, significantly exceeding the broad market (WIG +47.3%) and the diversified index of small companies SWIG80 TR (+30.3%).
“Over the last 5 years, the Price/Earnings ratio for companies from the SWIG80 index has been on average 20% higher than the corresponding indicator for WIG20. Currently, the Price/Earnings ratio for both indices is at a similar level, which implies a relatively attractive level of valuation of small companies,” the report says.
“After a significant increase in valuation indicators of State Treasury companies last year, we currently prefer entities with private shareholdingwhich are characterized by a more favorable ratio of potential profit to risk. We assume that a selective approach focused on quality will be key. We direct our attention towards small and medium-sized companies that better reflect the realities of the domestic economy” – added.
Artificial intelligence not only in the USA
The managers of Santander TFI believe that the artificial intelligence segment still has the potential to drive growth in company profits and thus maintain elevated valuations. Demand for computing power remains structurally strong in both model training and the implementation of generative AI in business.
“The AI ecosystem will increasingly enter the monetization phase, which will translate into growing revenues in the cloud, semiconductors, software, and will increasingly penetrate more industries. Although there are more and more warning signals, the classic signs of a bubble are still missing,” the report says.
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According to managers, unlike the euphoria and extreme dot-com valuations at the turn of the century, earnings growth and cash flows are now keeping pace with valuations. “In addition to selective exposure to developed markets, emerging markets may be a non-obvious choice for investing in modern technologies.. Markets such as South Korea, Taiwan and China are increasingly benefiting from widespread technological transformation through integration with global supply chains for semiconductor production, components and infrastructure,” the report said.
“The center of gravity has shifted from raw materials to technology and consumption, and currently the largest companies are dominated by global technology leaders such as TSMC, Samsung, Alibaba and Tencent. Paradoxically, despite the change in the sector profile and faster expected growth in results, the discount in the valuation of emerging markets compared to the global share index has widened in recent years. The above-mentioned arguments, combined with the continued weakness of the dollar, should favor further capital inflow to emerging markets. Exposure to this segment may be a source not only of an excess rate of return, but also of portfolio diversification,” it added.
It was a turbulent year on financial markets
The managers of Santander TFI point out that 2025 will be remembered on the financial markets as a period of dynamic changes, in which investors repeatedly shifted the focus between concerns about inflation, monetary policy, fiscal situation and geopolitical factors.
The beginning of the year was marked by increased uncertainty around the path of interest rates and disappointment with the pace of disinflation, especially in the US, where a persistently strong labor market and high core inflation effectively postponed the prospect of quick interest rate cuts. In Europe and emerging markets, fiscal tensions and political instability remained an additional source of concern.
“Spring brought an increase in volatility. The escalation of trade tensions, symbolically culminating around the so-called Liberation Day, and growing concerns about fiscal consequences on both sides of the Atlantic led to sudden movements in the markets and a temporary retreat from risk. At the same time, macroeconomic data, especially from the USA, did not confirm the scenario of a hard landing of the economy, which gradually stabilized investor sentiment,” it wrote.
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The second half of the year was marked by normalization: central banks started or clearly signaled a easing cycle, inflation gradually subsided, and financial markets showed relatively high resistance to geopolitical shocks.
“The effect of the entire year was a clear divergence between asset classes and regions. Equities, especially in emerging markets and selected countries in the CEE region, ended the year very solidly, while the debt market operated in a more demanding environment, rewarding selectivity and exposure to credit risk,” wrote Santander TFI in the report.
