Market environment and economy

Risk Factors Relating to the Market Environment and the Polish and Global Economy

Adverse developments affecting the Polish economy and its outlook may negatively affect the Group’s business, financial condition and results of operations

The Group’s business is highly dependent on the performance of the Polish economy. Changes in the state of the Polish economy affect the business and investment activities of issuers whose securities are listed on the markets organized and operated by the Group, including their financial results, which in turn may affect the prices of these securities, the volume of transactions, as well as activities related to issuing new securities and the number of market debuts.

The Group’s revenues depend directly on the level of listed asset prices and the frequency and volume of trading on the markets organized and operated by the Group, while the Group’s costs remain largely fixed. Consequently, during periods of economic volatility and risk aversion, the Group’s revenues may decline; combined with a stable cost level, this could reduce the Group’s potential profit or cause a loss.

Factors beyond the Group’s control could significantly reduce demand for its products and services as well as harm its business, financial condition and results of operations

The volume of trading, the number of new listings and demand for the Group’s products and services may be affected by economic, political and market developments, both domestic and global, that are beyond the Group’s control, including in particular:

  • general trends in the global and domestic economy and on financial markets;
  • changes in monetary, fiscal and tax policies;
  • the level and volatility of interest rates;
  • inflation pressures;
  • changes in foreign exchange rates;
  • adoption of euro as the currency of Poland (causing potential changes to monetary and fiscal policy or causing changes in the allocation of investor portfolios);
  • institutional or individual investors’ behaviour;
  • volatility in the prices of securities and other financial instruments;
  • availability of short-term and long-term funding and capital;
  • availability of alternative investment opportunities;
  • legislative and regulatory changes; and
  • unforeseen market closures or other disruptions in trading.

Economic situation of other countries and perception of risks related to the economic situation of other countries could have a negative impact on the perception of the Polish economy, business prospects of the Region, and consequently the Group’s business, financial condition and results of operations

The economic situation and market conditions of other countries could influence the perception of the Polish economy and financial markets. While the economic situation of other countries could be materially different from the economic situation of Poland, investors’ aversion to risks due to the economic situation of other countries could reduce the value and number of orders or the volume of trading in financial instruments on the markets of the Group.

More uncertainty among investors and stronger volatility of the prices of instruments on financial markets could reduce the activity on the Polish capital market and consequently have an effect on the Group’s business, financial condition and results of operations.

Sharp increase of the interest rates could boost the cost of servicing the Group’s liabilities

The Group is exposed to a risk of interest rate changes due to issued debt instruments with variable interest. A sharp increase of the interest rates including the base rate of the bonds could boost the cost of servicing the liabilities under the bonds and have an adverse effect on the Group’s financial condition and results of operations.

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