BlackRock Poland and Amundi eastern Europe ETFs have soared this month after Poland’s recent election saw victory for the Civic Coalition alliance led by former Prime Minister Donald Tusk.
According to data from justETF, the $111m iShares MSCI Poland UCITS ETF (IPOL) has gained 15.7% over the past month, as at 30 October, while the $147m Lyxor MSCI Eastern Europe ex-Russia UCITS ETF (CEC) returned 10.6%.
The election result will see the Civic Coalition and two opposition parties – Third Way and The Left – take a majority in the lower house of Poland’s parliament and mark an end to eight years of government by the Law and Justice (PiS) party.
The coalition, led by Tusk as prime minister, is expected to see Poland shift back towards a more pro-European trajectory, potentially releasing billions of euros of EU funding currently withheld because of PiS judicial reforms.
Recent election-based gains cap off a strong year for IPOL and CEC, with the former skyrocketing 56.9% over the 12 months to 30 October, the best returns of any UCITS ETF. CEC bounced 51.5% over the same period, owing to its large 68.5% allocation to Polish equities.
In 2022, the ETFs benefitted from economic growth in Poland led by a supportive fiscal policy and labour market growth.
Last month, National Bank of Poland President Adam Glapiński took the unorthodox step of cutting interest rates by 0.75% last month.
The opposition coalition said it would replace Glapiński if elected – despite this being challenging under Polish law – but Glapiński is expected to adopt more hawkish policy going forward.
The other stumbling block for Tusk’s incoming coalition is Polish President and PiS party ally Andrzej Duda, who is not expected to convene a new parliament until nearly a month after the opposition alliance’s victory, meaning the new government will not be installed until December.
