Poland’s ruling party has set off a new flurry of changes to the leadership of state-controlled companies, putting investors off a stock exchange that beat all emerging markets last year.
The CEOs at nine companies have been changed this year, hitting their share prices and adding to other factors driving the Warsaw Stock Exchange WIG20 .WIG20 down 18 percent in dollar terms after last year’s 53 percent rise.
Around 20 senior managers have also been shifted since December, amid signs of infighting within the governing Law and Justice (PiS) party.
The absence from public life since April of its leader Jaroslaw Kaczynski due to health problems has added to the uncertainty. Kaczynski is Poland’s political arbiter and author of interventionist policies criticized by the European Union.
The changes have taken place under Prime Minister Mateusz Morawiecki, appointed by PiS in December to try to ease strains with Brussels over the party’s judicial reforms.
Morawiecki’s background running a bank owned by a foreign firm made some investors think he would sympathize with their position more than his PiS peers. Now they are not so sure.
“Investors do not know what the strategy is,” said Marcin Szortyka, head of equities at NN Investment Partners TFI, one of the top five investment funds in Poland, citing uncertainty over potential banking sector mergers, the future of fuel companies and whether a nuclear power plant would be built.
Poland is the biggest beneficiary of EU funds and the EU has threatened to cut funding in its next budget round unless Morawiecki can convince them by late June that the government is not threatening judicial independence.
A separate EU plan to divert some funding from northern European states such as Poland to southern ones tackling a refugee crisis has further clouded the outlook.
Against this challenging backdrop, some investors say the corporate changes are a step too far.
“The market is already complicated enough without that,” said Tim Love, investment director of emerging market equities at global asset management company GAM.