This article is a part of Poland Unpacked. Weekly intelligence for decision-makers
Compared with the beginning of 2022, the strongest gains have been recorded by the BET index, which tracks the largest companies listed on the Romanian stock market. In US dollar terms – after adjusting for exchange-rate effects – the index is now more than 2.5 times higher.
Interactive chart Over the same period, Poland’s WIG20 index has risen by 84%, while Lithuania’s stock market index has gained 57%.
The stock market indices of the other Baltic states have performed considerably worse. Since the beginning of 2022, Estonia’s index has increased by only 8%, while Latvia’s has fallen by as much as 25%.
The weakest performer among the group has been Russia’s RTS index, which includes the 50 largest companies listed on the Russian stock exchange. Measured in US dollar terms, it has lost 46% since 2022.
Interactive chart A symbolic shift illustrating the changing fortunes of regional markets is that Orlen’s market valuation is now higher than that of any individual Russian energy company. On the one hand, this reflects the Polish company’s strong increase in market capitalization: at the end of 2021, Orlen was worth less than USD 6 billion (EUR 5.1 billion; approximately PLN 24 billion), while today its market value is close to USD 45 billion (EUR 38 billion; approximately PLN 180 billion).
On the other hand, Russian energy companies have suffered dramatic declines in market capitalization. Gazprom was valued at nearly USD 110 billion (EUR 93 billion; approximately PLN 440 billion) at the end of 2021; today, its market capitalization stands at around USD 26 billion (EUR 22 billion; approximately PLN 104 billion). Other Russian energy giants – including Novatek, Rosneft, and Lukoil – have also seen their valuations fall sharply.
Stock market performance as a measure of the region’s success
Changes in the value of listed companies are driven by a wide range of factors – from corporate fundamentals to perceptions of political and geopolitical risk. In this case, it appears clear that geopolitical considerations have played a significant role. After initial fears and capital outflows from Central and Eastern European economies in the early stages of the war, investors have returned with renewed confidence.
This is a measure of success – not only economic, but also geopolitical – for the region. A sharp increase in defense spending, purchases of advanced military equipment, decisions to expand armed forces, and stronger political alliances have produced tangible results in the form of greater confidence among foreign investors.
Central and Eastern European countries – perhaps with the exception of Latvia – have been among the economic winners of recent years. Russia, by contrast, has emerged as the loser, facing capital flight and an economic crisis.