It’s that time again. And no, I’m not talking about the run-up to Christmas, even if a few vanilla crescent cookies have already found their way onto our desks. I’m referring to something that doesn’t happen annually but does show up with a certain regularity every three to five years: the strong outperformance of the Austrian stock market and its sudden “rediscovery” by investors.
The stars have to align for that to happen. Our local market is highly cyclical and dominated by financials, industrials, and energy companies. These stocks tend to shine when the first signs of a brighter economic outlook appear. Interest rates fall, companies start investing again, and homebuilders try to secure financing. At the same time, things mustn’t look too good, otherwise inflation risks could be rising, central banks withdraw support, and next year’s economy takes a hit.
This year we found ourselves in exactly that “sweet spot” (even if the mood in the country would have you believe otherwise). And the strong momentum continued through November. The ATX posted solid gains, while international indices mostly took a breather or even slipped into negative territory.
Geopolitically, the biggest headline may have turned out not quite as big as advertised (who was really expecting anything else from this U.S. administration?): once again, a peace plan for Ukraine is being negotiated. The original proposal had a bit of a Russian “aftertaste,” but thanks to tight deadlines and some follow-up talks, at least further negotiations are on the table. So far, so good. But if you believe the betting markets (a wonderful invention indeed), the odds of a ceasefire remain below 10%, deadline or not. From a human (and even an economic) perspective, an end to the conflict would certainly be welcome. But the hope that we could then skip the promised billions in defense spending belongs more in the realm of Christmas fairy tales. The security situation hasn’t changed, and without implicit U.S. backing, Europe will have to learn to stand on its own two feet. Unfortunately, that’s costly but unavoidable.
Commodities also reacted to the possibility of easing tensions in Ukraine: oil and gas prices edged lower. Hopes for increased supply from Russia (or at least fewer costly detours through India and other Asian states that weren’t too strict about sanctions) also pushed refining margins down, though they still remain extraordinarily high. (In case you’re wondering why lower oil prices never seem to reach the pump: it’s not just those “terrible taxes” driving prices up.)
If you’re considering a Vienna Philharmonic gold coin or something similar as a Christmas gift: it just got a bit more expensive. Gold continued its strong rise in November, despite the easing of geopolitical tensions. We’re still just below last month’s all-time highs (in USD terms), but gold has definitely been cheaper in the past (in fact, at almost any other moment in human history, at least nominally).
But the “pricey” argument doesn’t apply only to gold. After the strong rally in equities, many investors (and onlookers) are probably asking themselves: is it already too expensive?
In recent years, our domestic market was almost embarrassingly cheap compared to global peers. Part of that was due to sector composition (financials naturally trade at different multiples than, say, tech firms), but part was due to an “Austria discount.” Whether that discount stemmed from low liquidity, perceived Eastern European risk, or even politics is up for debate. What is certain is that the discount has become much smaller this year. That means domestic companies will have to deliver stronger results in the future to keep convincing investors. The potential for that is definitely there...
Author:
Bernhard Haas, Erste Asset Management GmbH
Fund manager
1 December 2025
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Note
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.