“In the short term, the potential direct impact of the Commission’s move on Poland’s economy and government finances is limited. Even if Poland were to remain non-compliant and the Commission launched an Article VII procedure, it would lack the ability to implement sanctions, as this would require a unanimous vote and Hungary has already announced it would stand behind Poland,” according to Fitch.
Related: Why Poland is Among 2017’s Best Emerging Markets
In July, Standard & Poor’s boosted its forecast for Poland’s 2017 GDP growth to 3.6% from 3.3%. The ratings agency forecasts growth of 3.1% next year and 3% in 2019.
PLND and EPOL do not hedge their currency risks so an appreciating zloty has helped bolster U.S.-dollar denominated returns. Interestingly, Polish stocks are not pricey. For example, PLND has a trailing 12-month price-to-earnings ratio of just over 13, which is slightly below the multiple on the MSCI Emerging Markets Index and well below what the P/E ratio on the S&P 500.
For more information on the Polish markets, visit our Poland category.