Poland's Presidential Election: A Geopolitical Crossroads for Investors

Poland's 2025 presidential runoff between Rafał Trzaskowski and Karol Nawrocki is more than a domestic political contest—it's a referendum on Europe's geopolitical future. The stakes are clear: a Trzaskowski victory leans toward EU integration and stability, while a Nawrocki win risks fracturing transatlantic unity and escalating regional tensions. For investors, this election is a high-stakes opportunity to position for either a “pro-EU equilibrium” or a “nationalist rupture,” with profound implications for defense, energy, and financial markets across Central Europe.

The Candidates: Two Visions, Two Markets

Rafał Trzaskowski, the centrist mayor of Warsaw, represents continuity with Prime Minister Donald Tusk's pro-EU Civic Coalition. His platform emphasizes judicial reforms to satisfy Brussels, maintaining NATO's 6% GDP defense spending target, and accelerating renewable energy investments. A Trzaskowski win would likely stabilize EU-Poland ties, unlocking frozen EU recovery funds (€5.8 billion in limbo) and boosting sectors tied to EU integration.

Karol Nawrocki, the PiS-backed nationalist historian, champions sovereignty over supranational institutions. His Euroskepticism could reignite clashes over judicial independence, delay EU funding, and push Poland closer to illiberal allies like Hungary. A Nawrocki victory would escalate geopolitical risk premiums, favoring sectors insulated from EU discord—defense contractors, domestic energy firms, and banks with strong liquidity.

Scenario 1: Trzaskowski Wins – EU Reintegration & Stability

Opportunities in EU-Aligned Sectors:
- Renewables & Energy Infrastructure: Trzaskowski's push for EU compliance means green energy projects like the Baltic Pipe (LNG terminal) and offshore wind farms gain urgency. Orsted (ORSTED.CO) and NextEra Energy (NEE) could benefit as Poland accelerates its EU 2030 decarbonization targets.
- Defense Tech: NATO interoperability remains a priority, favoring firms supplying missile systems (e.g., Raytheon Technologies (RTX)) and cybersecurity (e.g., Thales Group (THGS.PA)). Poland's $45 billion defense modernization plan remains intact.
- Banks & Equities: Reduced political uncertainty would lift Polish banks like PKO BP (PBP.WA) and mBank (MBC.WA), as EU funds restart infrastructure spending.

Risk: Overvaluation in EU-linked stocks if markets price in “peace dividends” too aggressively.

Scenario 2: Nawrocki Wins – Geopolitical Volatility & Value Plays

Winners in Turbulence:
- Defense Contractors: A Nawrocki victory would prioritize U.S.-centric security ties, boosting Boeing (BA) and Lockheed Martin (LMT) as Poland seeks F-35 jets and HIMARS systems. Domestic arms firms like PGZ (PGZ.WA) could also gain from redirected spending.
- Energy & Banking Value Stocks: PGNiG (PGN.WA) and Tauron (TAUR.WA) could offer asymmetric upside if Nawrocki's Euroskepticism delays EU green mandates, extending Poland's reliance on coal and LNG. Meanwhile, PKO BP and Santander Poland (CIG.WA), with strong capital buffers, could outperform in a stressed environment.
- Short EU Exposure: Investors might hedge against EU-funded project delays by shorting iShares MSCI Poland ETF (EPOL) or Siemens Gamesa (SGRE.MC).

Risk: Capital flight and currency volatility if EU tensions escalate, pressuring the zloty (PLN).

The Tipping Point: Defense Spending & EU Funds

Poland's defense budget—already at 6% of GDP, the highest in Europe—will be a battleground. Trzaskowski's NATO alignment could attract Raytheon contracts for Patriot missiles, while Nawrocki's focus on border security might boost Kongsberg (KOGS.OL) for coastal radar systems.

Meanwhile, the fate of €36 billion in EU recovery funds hinges on judicial reforms. A Trzaskowski win would clear the path for these funds to flow into tech and green projects, benefiting CD Projekt (CDR.WA) in gaming and PGE (PGE.WA) in renewables. A Nawrocki victory, however, risks prolonged delays, favoring domestic firms insulated from EU red tape.

Investment Strategy: Position for Either Outcome

• Trzaskowski Play:
• Buy Orsted (ORSTED.CO) and RTX for EU integration themes.
• Overweight PGZ as a “buy the dip” defense play.

• Use EPOL as a leveraged bet on EU stability.

• Nawrocki Play:

• Short SGRE and EPOL to hedge against EU discord.
• Buy PGNiG and PGZ for their defensive, domestically oriented profiles.
• Consider Polish 10-year bonds (PLN) as a carry trade if rates stabilize.

Conclusion: Time to Choose Your Side

This election is a binary bet on Central Europe's future. Investors ignoring the geopolitical tailwinds and headwinds here risk missing one of the decade's most consequential market shifts. Whether you side with EU cohesion or nationalist disruption, the time to act is now—before the results reshape risk premiums across the region.

The world is watching Poland. Are you positioned to profit?

Data sources: Polish Ministry of Defense, European Commission, Bloomberg Intelligence.