Analysis: Austrian stock market – Companies continue to benefit from Eastern European activities
The ATX was already up by around 20 % this year, but in line with other global stock markets, Austria's most important share index, after a brilliant start to 2019, has now lost almost half of its value again. The main reason for this is the trade war which has broken out in the meantime and which is severely affecting international companies such as OMV. Nevertheless, the ATX is currently up 12 % year to date (5 June 2019).
The arguments for investing in the Austrian stock market are manifold:
- The valuations of Austrian corporate stocks are lower than those of many other Western European countries and, in some cases, Eastern Europe as well - which is why it is still worth investing in them.
- The Central and Eastern European market (CEE), in which many listed companies are active, is growing faster than Western Europe. This development also has an impact on corporate profit growth, which remains intact and at around 9% is also higher than in many other countries in the region.
- The interest of domestic and foreign investors remains high. This is because Austrian companies that are active in Eastern Europe and have branches there enable investors to invest indirectly in Central and Eastern European markets. This is particularly important for those investors who have restrictions in their portfolios regarding to European emerging markets.
- The price performance of the ATX also has catch-up potential in absolute terms. The value of the index currently stands at around 2941 points (as at 5 June 2019) and is still far from its high (4,982 points).
With the intensification of the trade war between the USA and China, the global stock markets - and with them also the ATX - have come under strong pressure. China's importance for the global economy (including as a supplier of raw materials) is now too great and its political influence too significant to have any impact on the other internationally oriented markets. Europe is between these fronts. And European companies that trade with both China and the US - and there are many of them - must fear effects from both sides.
On the sector side, we regard cyclical stocks and banks as positive drivers and continue to regard Austrian real estate stocks as attractive investments. The latter have always been historically cheap, and even today Austrian stocks - although they are in great demand - are for the most part still quoted below their book value. This means that they still have catch-up potential compared to the real estate shares of other countries. CA-Immo is very active in the development sector in Germany and Immo AG could be taken over by another company, thus increasing its value. UBM Development, which buys and develops land, is also an important player and, in our view, an attractive investment at time being. Apart from the real estate shares mentioned above, we also like OMV very much. The company is undergoing a transformation process, away from oil and towards gas and petrochemicals. The special fiber supplier Lenzing AG is also an interesting company for Raiffeisen KAG in terms of financial earnings as well as sustainability.
Investments in funds are exposed to the risk of price fluctuations and capital losses.
The published prospectus and the customer information document (key investor information) for Raiffeisen Austria shares are available at www.rcm.at in German.
Within the framework of its investment strategy, Raiffeisen Austria Shares may invest predominantly (in relation to the associated risk) in derivative instruments. The fund exhibits increased volatility, i.e. the unit values are subject to large upward and downward fluctuations even within short periods of time, whereby capital losses cannot be ruled out.
Status: June 2019
Chief Investment Officer
6 June 2019
Wiener Börse AG would explicitly like to point out that the data and calculations given in this report are historic values, which do not permit any conclusions as regards future developments or value stability. Price fluctuations and loss of capital are possible in securities trading. The contribution is the personal opinion of the analyst and does not constitute a financial analysis or a recommendation for investment by the exchange operating company, Wiener Börse AG.