Sell-Side Desks React To Preliminary Election Results

Below we summarise the views of local sell-side desks on the initial results of Poland's parliamentary elections:

• President Andrzej Duda will emerge from this parliamentary election stronger, according to ING analysts. Late polls suggest that the pro-EU coalition will not be able to override his veto, while PiS will be a strong opposition party. ING expect the formation of a pro-EU government to result in a return of foreign investors to the Polish debt market and the creation of a better environment for FDIs.
• mBank warn that the zloty's reaction "hangs on" the late poll results, which can deviate from official results. Furthermore, even if they are replicated in official results, fiscal consolidation remains a distant prospect, while the outlook for monetary policy remains highly uncertain.
• Millennium Bank suggest that a government formed by the current opposition could defuse tensions with the EU and unblock access to frozen funds. They do not expect any near-term changes to fiscal policy, including its emphasis on social spending.
• PKO write that we may face the longest period of Polish government formation on record. Historically, the ruling coalition was usually formed around the largest party. This time around, the front-runners are expected to fail to form government, before passing on the baton to smaller parties.
  
• Among the election-related factors supporting the zloty, Santander list the prospect of "improved relations with the EU, increased likelihood of EU funds inflows, improved institutional strength of the country, less chance of further pronounced interest rate cuts".