WIG20 is one of the most important indexes of the Warsaw Stock Exchange. Calculated continuously since April 16, 1994, it includes the 20 largest and most liquid companies listed on the WSE Main List. Its value is calculated based on the share prices of these companies, without taking into account dividend income. The first index value was 1,000 points.
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To the question: “what is WIG20?”, the simplest answer is to explain that it is a barometer of the Polish economy. WIG20 fluctuations and quotations reflect the situation of the largest companies listed on the WSE.
For investors, this is a key indicator that allows them to assess market sentiment and make investment decisions. Knowing how the index works helps you better understand stock market mechanisms and investment risk.
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This index is often called the “blue chip” index, i.e. companies with large capitalization, high liquidity and stable financial results. The term “blue chips” comes from the color of the most expensive chip in Monte Carlo casinos.
What is WIG20? Here's how it works, which companies and why it's important
What companies are in WIG20? ABOUT the selection of companies that will be listed in the WIG20 index is directly determined by their market capitalization, as well as the value of share trading itself.
To be included in the index you must:
- the number of shares must be greater than 10%. in free circulation
- in free circulation, the value of the shares must be higher than EUR 1 million
- the company cannot be marked in a special way, e.g. bankruptcy or composition proceedings
- the company cannot be classified in the Alert List segment and cannot be located in the Low Liquidity Zone
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Currently, WIG20 includes the following companies:
- Alior Bank
- Allegro
- Budimex
- CCC
- CD Projekt
- Dino Poland
- KGHM
- Kęty Group
- Raven
- LPP
- mBank
- Orange Polska
- PKO BP
- PGE
- PKN Orlen
- PZU
- Pekao SA
- PEPCO
- SANTANDER BANK POLSKA
- FROG
The financial sector, represented by, among others, by Bank Pekao, PKO BP and PZU, is responsible for approximately 30%. index values. The TOP 5 in terms of share in the WIG20 index are: PKO BP (15.04%), PKN Orlen (13.29%), Pekao (8.45%), PZU (8.2%) and KGHM (6.60%).
WIG20 quotations are a barometer of the Polish economy. But why exactly?
The value of the index is influenced by company share prices, the economic situation, inflation, interest rates and investor sentiment. Optimism in the market increases the index, while fears about a recession may lower it.
Why are WIG20 quotations treated as a barometer of the economy? For example, in 2020, during the spring lockdowns, the index fell by approximately 40%, mainly due to the weakening of the banking sector. In turn, in November of the same year, when information about vaccines appeared, WIG20 recorded an increase by 20%.
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The WIG20 index is updated based on the ranking, which takes into account data from the last 12 months, such as the value of share turnover and free float capitalization. Adjustments to the index composition are made quarterly, and a general revision is carried out once a year.
Stock exchange indices, such as WIG20, play a key role for investors, enabling them to assess the effectiveness of their investments compared to the market. In other countries, e.g. the German DAX or the French CAC perform a similar function.
