On January 11th this year I noted a significant decoupling of WIG20 from S&P500. Since then WIG20 has re-coupled and followed the path marked by larger markets.
Today we can observe another quite noticeable decoupling of the Polish stock market and its larger counterparts.
However, while the probability was tilted toward WIG20 compressing upwards with the S&P500 in January, I would currently suggest that WIG20 may actually be a harbinger of the wider equity correction this time.
To strengthen the call, it would be helpful to analyze the contributions of the WIG20 constituents as well as performance of other emerging market indexes.
Just by comparing WIG20 to the wider index WIG as well as indexes comprising of smaller cap companies - mWIG40 and sWIG80 - we may notice that WIG20 is leading the correction on the Polish market and the other indexes are following:
WIG20 also seems to plot the future path for the other emerging markets:
Nevertheless, seems we are realizing the scenario 2 for the Polish equity market in 2012 as described in the previous post, so far ;)