Poland voted on 15 October 2023 and, according to the updated exit poll, the opposition led by Donald Tusk has a majority in the Sejm. What is known, how the market reacted and what is at stake for EU funds.
On Sunday 15 October 2023 Poland elected a new parliament, with a turnout that, according to early estimates, was the highest since the fall of communism. Law and Justice (PiS), the national-conservative party of Prime Minister Mateusz Morawiecki, has governed since 2015 and again won the most votes, but the polls suggest it will not be able to put together a majority. On election night Donald Tusk, leader of the Civic Coalition and a former president of the European Council, declared the end of PiS rule.
What is known
The data available on 16 October is the updated Ipsos exit poll, not the official count. It gives Law and Justice 36.6% of the vote and 198 seats; Tusk’s Civic Coalition 31% and 161; the Third Way 13.5% and 57; the Left 8.6% and 30; and the Confederation 6.4% and 14. Added together, the three opposition blocs would reach 248 seats, above the 231 needed for a majority in a chamber of 460.
These figures should be read with caution. The pollster itself warned that the estimate can differ by up to two points from the final result, and the official count by the National Electoral Commission was not complete: it was expected on Tuesday. The final distribution of seats may differ from these numbers.
What comes next is set out in the rules. The president, Andrzej Duda, who is close to PiS, must call the first sitting of the new parliament within 30 days of the election and name a candidate for prime minister. By democratic tradition he first offers the task to the party with the most votes, although he is not obliged to. In the meantime the current government stays on in a caretaker role. PiS said it would try to form a government with Morawiecki at its head, something analysts saw as difficult without winning over votes from other groups.
The market reaction
On Monday 16 the Warsaw stock exchange opened more than 2.2% higher, its best post-election opening since 1991, and by 2 pm the WIG20 index was up 5.2%, with the banking sub-index up close to 9% and stocks such as Pekao (almost 11%) and Orlen (8%) among the biggest gainers. The zloty strengthened to trade below 4.5 to the euro for the first time since early September, about 1.2% stronger than on Friday afternoon.
The move recovers part of the currency’s recent weakness, which had set in on 6 September, when the central bank cut rates by three times what the market expected. These are one-session moves tied to expectations of political change, and they do not guarantee a trend.
Why EU funds matter
Much of the reaction was put down to the expectation of better relations with Brussels. The European Commission was holding back billions of euros over concerns about the rule of law and judicial independence: figures that the financial press put at around €35 billion from the recovery plan and €76 billion from the 2021-2027 cohesion policy. Tusk pledged to unblock them from the first day in government. Analysts at Santander, mBank and Millennium linked the rise to that hope, although mBank cautioned that the expectation rested more on a feeling than on firm data.
Anyone with exposure to Poland, whether through funds, holdings or direct investments, would be well advised to wait for the official count, the nomination of the prime minister and Brussels’ timetable before drawing conclusions. For your own situation, ask your adviser.
The ballot box has given a majority; the change of government, and with it the funds, still depends on the timetable of the coming weeks.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
