“The role of the capital market in the development of the Polish economy cannot be overstated,” emphasizes Tomasz Orlik, a board member of PFR TFI. He notes that the current key priority is increasing the level of investments, especially considering the significant challenge of green transformation in the coming years. The capital market has a vital role to play in this process, but it requires active investors, including individuals. Therefore, urgent actions are needed to stimulate their activity and encourage them to invest household savings in the market. The new EU regulations are expected to assist in this effort.
“The Polish capital market, after over 30 years of development, is in a good position to reach the next stage. Although it remains relatively small compared to other European markets, it has high growth potential. However, it still lacks individual investors,” Tomasz Orlik tells Newseria Biznes.
He points out that the Polish economy currently needs rapid and significant investment growth, which requires capital and a robust capital market. Meanwhile, in Poland, the capital market’s share in financing the economy is currently only about 5% of GDP, whereas in the European Union it is five times higher, and in the United States, it is over ten times higher.
“The Polish economy is developing steadily, but we lack new, dynamic, innovative companies. The capital market’s role is to finance such enterprises so they can succeed in Poland and international markets,” emphasizes the PFR TFI board member. “Banks generally finance mature companies with proven business models. However, innovative companies that do not yet have a stable market position, a suitable customer base, or recurring income seek development financing on the capital market. Hence, it is crucial for private market funds to flow more broadly into the capital market.”
Stimulating the capital market is necessary due to the developmental challenges facing the economy. The primary challenge will be the energy transformation. Funds allocated for this purpose from the EU and the state budget will be crucial, but the scale of investments is so large that broad private capital involvement is also needed.
“The energy transformation at the EU level requires hundreds of billions of euros in financial engagement annually. This is one of the key elements for the further stable development of the EU. In the context of Poland, we need to invest about 600 billion PLN in the transformation by 2030. We will not receive such large amounts from the EU for this purpose. Hence, there is a significant need for the capital market to participate in financing this transformation,” says Tomasz Orlik.
Creating an environment conducive to greater participation of individual investors in European capital markets is the goal of the Retail Investment Strategy (RIS) directive, which the European Commission presented in May last year. According to consultancy firm EY, individual investors have substantial investment potential, but their participation in capital markets across the EU remains modest – only about 30% of retail savings are invested in stocks and investment fund units.
“The goal of the Retail Investment Strategy regulatory package is to encourage individual investors to allocate a larger portion of their savings to the capital market,” explains the PFR TFI expert. “The most important thing is that these investors trust the capital market, receive reliable information, and can assess the value of a given financial product against its costs.”
“Polish household savings held in banks amount to 1.3 trillion PLN. Comparing this to the assets of investment funds, which currently total 240 billion PLN, it is evident that this ratio is low compared to comparable EU countries. Moreover, in the European Union, the rate of capital market financing with household savings is much lower than in the United States, affecting the economy’s competitiveness,” stresses Tomasz Orlik.
One of the reasons explaining this trend is the low trust of European retail investors in capital markets. The European Commission indicates that almost half (45%) of European investors question the neutrality of investment advice they receive from financial intermediaries. They also often have difficulty accessing understandable and comparable information necessary for making informed investment choices. Additionally, individual investors face fees that are on average 40% higher than institutional investors.
This is why the European Commission aims to strengthen the position of individual investors and increase their trust in capital markets. The long-term goal is to boost their engagement in the development of EU economies. The proposed Retail Investment Strategy (RIS) – new legal frameworks designed to serve this purpose – is expected to come into effect in 2026.
“This package has stirred a lot of emotions among participants in the Polish capital market. On one hand, it is good that the EU has recognized the need to stimulate individual savings in the capital market and redirect some of their funds to this market. However, for Polish investment funds, some of these assumptions may be difficult to meet, such as benchmarking against Western funds, which are significantly larger than Polish ones,” says the PFR TFI board member. “Not all rules introduced by the Retail Investment Strategy are tailored to the conditions of the Polish market, and both the regulator and the fund industry are currently actively working to prepare for the implementation of the proposed regulations, taking into account the specifics of the Polish market.”
