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Polish stocks fall after NATO member shoots down Russian aircraft in its airspace

Polish stocks fell on Wednesday, after Poland shot down Russian Drones that had entered its airspace as part of a Russian offensive in western Ukraine.

At 0829 GMT the Warsaw blue-chip index slid to 2.6%, making it one of only a few European indices that were trading lower.

Konrad Ryczko is an analyst with DM BOS. He said that the future of the situation was uncertain.

Robert Maj, an Ipopema Securities analyst, said that the drop was a reaction to overnight events, and gave investors a reason to take advantage of recent gains.

Maj added: "It is also a form profit-taking, because the Warsaw Stock Exchange had one of, if no better, the best performing indexes in this year."

The benchmark index fell when Russia began its war with Poland's neighbor in February 2022. It has recovered and is now up 28% this year. This puts it in competition with markets such as Hong Kong for year-to-date gains.

Some stocks in the defence sector rose as investors expected to benefit from a rise in geopolitical tensions.

Shares of military supplier Lubawa rose 4.2% while Zremb Chojnice - which produces dual-use steel structure - jumped to record highs by around 10%.

Maj said: "Companies within the defence sector... could benefit from an increase in geopolitical tensions, and this is exactly what we are seeing today on the stock market."

The WIG20 index was down 3.5% to 3.8%, with the biggest losses coming from lenders Alior Bank, Pekao, and refiner Orlen.

(source: Reuters)