Poland A, Poland B

I've seen a report about Grupa Azoty which tells of complete chaos, as nothing is done without the permission of the relevant ministers, and as each minister is fighting for position, they're essentially competing to see who can pack the most cronies into these companies.

Unsurprisingly, Azoty's share price is massively down on 2015.

Government control isn't the problem it's management and certain obstructionist policies. There's tons of Russian, cis, Gulf, Latam giants with government control that keep western investors happy. Aside from when an issue results in arbitration most western shareholders are happy.

Poland still sees a lot of FDI arguably the most or one of the most in eastern Europe. But there is little investment in greenfield Ventures which really drives growth rates the most and where the most innovation occurs. Most investment is expansion of existing franchises, acquisitions, joint ventures but now there's less foreign capital investing in the larger Polish companies. The Polish bond market is doing better now though.

stock exchange is basically gambling anyway - why would the government bother with stock prices - it only affects a couple of inverstors (gamblers) of whom only a fraction are Polish anyway

It's also an important source of finance for companies. If the government oversees a collapse in share prices, then it becomes much more difficult for businesses to launch an IPO in order to raise money. Many pension funds also invest heavily on the stock market to provide greater than inflation returns.

A weak stock market means weak Polish companies.

the pension funds should be banned from gambling on the stock market anyway

And increases the cost of government borrowing. Something that does matter to the more vulnerable parts of Poland B.

how does actually weak stock market influence the cost of debt for a nation?

Yeah more often than not its mutual funds.


Many people agree especially those who lost a ton of money when apple, facebook and a few others dropped.

At the same time, pensions for government employees from teachers to janitors to cops to administrators making 400k a year, are the reason why so many municipalities and even whole states are either bankrupt or on the verge of bankruptcy.

One thing that is much better about Poland, Russia, Saudi Arabia, etc and many countries is that the government has its own multi billion dollar companies from which they gain money for their budgets. The US doesn't have that - it relies solely on taxpayers which is an ever shrinking pool as the labor force participation rate keeps is constantly declining while at the same the overall population grows. A lot of these municipalities even ones as big as Chicago/Cook county are constantly debating whether to use ever dwindling resources to fund pensions, fix potholes, hire more cops, etc. Poland does a much better job at funding pensions. In fact, the pension system is quite generous for many professions. My cousin went into being a corrections officer because they basically retire by the time they're 50. She'll only do the job for something like 20 years and that's it.

Check out gilts.

The problem with that is that governments are often tempted to raid those companies for money rather than keeping it for a rainy day. Norway did it right with the oil fund, Poland, Russia, Saudi Arabia are all doing it wrong because they're using those companies to prop up the budget.

The other problem is that governments often then use these state-controlled companies to destroy private business. There are so many examples over the last 30 years in Poland where a state-controlled company has called in 'help' to deal with a private rival. Did you see the case recently with the private printing company?

wiadomosci.radiozet.pl/Polska/Wojskowa-spolka-zawyzala-koszt-druku-matur.-Panstwo-stracilo-na-tym-miliony-zlotych

Still, I'd much rather a government draw an ever increasing share of money from government owned companies than keep taxing people more and more. If Poland didn't have government owned companies it'd have a far smaller budget. Some countries rely especially where citizens are poor rely on these companies almost exclusively.

A president or minister can't just go to a government company especially a publicly traded one and demand money. For private ones yes, that is why well probably never see an aramco ipo. But yes obviously they will receive preferential treatment.


Messed up but unsurprising. This is common with government contracts all around the world. It's no different in the u.s. Even suburban municipal councils who decide which companies bid gets approved act like they are gods of the pantheon and have no qualms about subsidizing their government salaries with gifts and favors.

That's fine if you are sitting on top of oil like Pemex or Aramco but in Poland there is only one such company - KGHM, who have cut their dividends drastically but increase the salaries to the PiS functionaries on the board.

In other businesses then the Polish consumer does pay if PiS uses these as Bankomats to fund their giveaways - a prime example is the banking tax. It has cut bank profits in half but the banks are now recouping it by passing a lot of extra charges on to customers and especially to small businesses - for example my own bank charges for a modest spare time consulting business are over 500 zloty this month. PZU are increasing premia and the power and oil companies also increasing their charges.

I am not totally against a portion of strategic companies being state owned so long as they don't interfere too much in the mgmt. or the free market.

are you seriously comparing the amount spend on the salaries of the managerial class in say KGHM to what they spend on dividends - you must be a prisoner of your own prejudice then

Yes - attached chart shows the fall in dividends - i don't know eventually what happened in 2017 because like most normal people I have ditched the stock the year before. The shenanigans of the PIS members of the board are well documented

kghm.com/en/investors/dividend

Even the trade unions were exasperated with the constant management changes in KGHM. There's a good article here about it - polsatnews.pl/wiadomosc/2018-06-20/zwiazkowcy-z-kghm-bronia-spolki-przed-politykami-z-pis-dosc-zabawy-i-eksperymentow - essentially, it looks like there's a very deliberate policy within PiS not to allow senior management to spend too long in post. The jobs get rotated round, meaning that everyone gets 'their share' and that they constantly fight for position.

In this sense, they're even worse than the PZPR.