(Vienna) New listings, capital increases, secondary public offerings by listed companies and political support are the ingredients needed to make the Vienna Stock Exchange attractive again to private and institutional investors in Austria and internationally. This was announced by the new management team of Wiener Börse AG, Birgit Kuras and Michael Buhl, at today's press conference. These activities would increase liquidity on the Vienna Stock Exchange; some initial signs have already started to appear as shown by the growing investor interest seen at the road shows.
"Now is a good time for fresh capital. The market has found solid ground, but there is still room for upside potential," said Birgit Kuras. She hopes that the new listings will also include privatizations of state-owned enterprises: "A look at the general effects of privatizations and public offerings on the development of the companies concerned, and thus also on Austria's economy, reveals the current political demonization of the Austrian capital market as incomprehensible, and consequently, damaging to the national economy."
Birgit Kuras plans to concentrate efforts on measures to attract capital increases and secondary public offerings (SPOs) by already listed companies and in this manner increase the free float. The larger the free float, the more attractive a stock is to investors, because of the higher liquidity. Most companies listed on the prime market already have a free float of over 40%, but some companies have additional potential.
Another important topic in the view of Birgit Kuras is the establishment of the subject of capital markets in Austrian school education. "We have to stop the fear of equities in tomorrow's private investors by informing them and improving their education. I would like to see equity investment become a fixed subject of school curricula so that it will soon no longer be possible for leaving-year students to go through their entire schooling having hardly ever touched on the subject of equities," explained Birgit Kuras.
A better political framework is urgently needed
"We need more support from politicians," added Michael Buhl and stressed that "even just a single political incentive/stimulus could light a fire on the Austrian capital market". Among the measures proposed by the Vienna Stock Exchange are the abolition of the capital gains tax on securities, the equal tax treatment of external and internal capital, the abolition of the tax on contributions of capital to companies, and the promotion of employee participation schemes. At the same time, Mr. Buhl warned against any moves that could further damage the capital market such as completely eliminating the state bonus for retirement provisioning, the re-introduction of a wealth tax or the introduction of a financial transactions tax by Austria alone.
Mr. Buhl also drew attention to the growing competition – in all of Europe – from OTC trading platforms which is also affecting the Vienna Stock Exchange. The percentage of such platforms in equity trading in Austria is currently around 20% but the trend is rising steadily. Every time a new hostile measure for capital markets is announced by politicians such as the possible return to a stamp duty on stock exchange transactions or a national financial transaction tax, we see another shift in trading volumes to off-floor trading venues.
CEE Stock Exchange Group: Vienna Stock Exchange sticks to Eastern Europe strategy
The Vienna Stock Exchange, the largest exchange of the CEE Stock Exchange Group, which also includes the exchanges of Budapest, Ljubljana and Prague, is not changing its Eastern Europe strategy. "We have succeeded in positioning the CEE Stock Exchange Group as the largest exchange group in Central and Eastern Europe and now the goal is to continue to strengthen our position," said Mr. Buhl. The implementation of the Xetra® trading system on the Prague Stock Exchange is planned for the end of this year. The exchanges of Vienna and Ljubljana already successfully use Xetra for trading, and its implementation on the Budapest will follow soon. Furthermore, the CEE Stock Exchange Group is working on a simple connection for national and international trading participants to all four exchanges of the holding company – a step that would help increase liquidity.
About the Vienna Stock Exchange
The Vienna Stock Exchange is a 100% subsidiary of the CEE Stock Exchange Group (CEESEG) which comprises the stock exchanges of Budapest, Ljubljana and Prague. The CEE Stock Exchange Group is the largest stock exchange group in the region. CEESEG makes access and trading on the local markets easier with the aim of improving liquidity. The CEESEG stock exchanges cooperate with 12 other exchanges in Central and Eastern Europe and enjoy international recognition for this unique CEE know-how.