Konrad Krasuski and Tugce Ozsoy

Mon, Jun 2, 2025, 6:58 AM4 min read

(Bloomberg) -- Polish stocks and bonds — among the world’s stand-out performers of 2025 — dipped after a nationalist unexpectedly won the presidential election, dealing a blow to the government.

Most Read from Bloomberg

• Billionaire Steve Cohen Wants NY to Expand Taxpayer-Backed Ferry

• Where the Wild Children’s Museums Are

• The Economic Benefits of Paying Workers to Move

• Now With Colorful Blocks, Tirana’s Pyramid Represents a Changing Albania

• At London’s New Design Museum, Visitors Get Hands-On Access

Investors are concerned that the victory by the resurgent right, which has been emboldened by Donald Trump, may unravel Poland’s pro-European Union tilt — impacting both fiscal and monetary policy and imperiling the rally in the nation’s assets.

Warsaw stocks slumped 3.4% on Monday before recouping most of the losses. Polish dollar bonds were among the biggest losers in emerging markets, while the zloty traded in the middle of a pack of 31 major currencies.

For now, traders are finding solace in the country’s strong economic growth. Roger Mark, a fixed-income analyst at Ninety One UK Limited, called the market reaction “relatively contained.” But in the coming months, markets will be on the lookout for friction between Prime Minister Donald Tusk and incoming President Karol Nawrocki, and whether that might exacerbate Poland’s hefty budget deficit.

“The outcome of the elections might harm the positive sentiment of this year,” said Adnan El-Araby, a fund manager at Barings Emerging EMEA Opportunities. “We now have to be more selective.”

Nawrocki, a conservative historian and former boxer, won 50.9% of Sunday’s runoff ballot, while centrist Warsaw Mayor Rafal Trzaskowski took 49.1%, according to unofficial tallies from the electoral commission.

More Downside

Henrik Gullberg, a macro strategist at Coex Partners, said the market-leading performances by Polish stocks and the zloty mean there’s more downside to a Nawrocki win than upside had Trzaskowski come through.

Poland’s WIG20 equity index traded 0.8% lower as of 3:53 p.m. in Warsaw, with banks leading the selloff. The gauge was up 40% in dollar terms this year as of Friday’s close, one of the strongest rallies globally.

“A Nawrocki win is thought to revive tensions with Brussels, stall judicial reforms, and therefore jeopardize access to over €130 billion ($148 billion) in crucial EU funding,” Gullberg said.

The yield on benchmark 10-year local-currency government bonds increased 10 basis points at 5.45% on Monday. The asset class had returned nearly 16% in dollars since December — the best performance among developing markets after Brazil and Mexico until just before the ballot. The zloty was down 0.2% against the euro after the vote.