- Equity trading still at high levels (+25% ytd), but gloomier sentiment weighs on ATX performance
- UK and US institutional investors show renewed interest in Austrian stocks, accounting for approx. 40% of trading – investor base continues to diversify as far as UAE and China
- BKS Bank capital increase starts tomorrow
- Shorter settlement cycle for securities (2 days) from 6 October
(Vienna) The third quarter on the Vienna Stock Exchange was a mixed picture: lively trading versus subdued market sentiment. Equity trading volumes are still at a high level, amounting to EUR 11.41 billion, 17% higher than in the same period of the previous year (Q3 2013: EUR 9.74 billion). Equity trading volumes were up considerably again in September versus the summer months, reaching EUR 4.23 billion (compare: 07/2014: EUR 4.02 billion, 08/2014: EUR 3.17 billion). Total equity trading volume on the Vienna Stock Exchange in the first three quarters of 2014 was EUR 36.08 billion (Q1-Q3 2013: EUR 28.91 billion), up by around 25% this year.
Despite the pleasing development of equity trading liquidity, price trends reflect the rather subdued sentiment on the markets. “After a very robust first half-year, sentiment on financial markets has become much more subdued in the third quarter. The reasons – as many economists and analysts have confirmed – are geopolitical crises as well as downward revisions of economic forecasts and profit warnings,” explained Birgit Kuras, Management Board Member of the Vienna Stock Exchange. "Nonetheless, some stocks have weathered the general market trend well and achieved substantial price gains in 2014."
Top stocks and top trading members in the first three quarters
The largest performance gains on the prime market in the first three quarters were achieved by DO & CO with 38.65% followed by Valneva with 31.51% and Zumtobel with 30.53%. Telekom Austria (29.63%) and AT&S (27.95%) ranked fourth and fifth respectively. The stocks with the highest trading volumes in the first three quarters were Erste Group Bank, ahead of Raiffeisen Bank International and OMV. At the top of the ranking of trading members in Q3 2014 was Deutsche Bank AG with a share of 9.51% in total trading ahead of the largest Austrian trading members Erste Group Bank AG (8.79%) and Raiffeisen Centrobank AG (8.37%).
According to a current survey, the top three investors in the domestic market in the first half-year of 2014 were institutional investors from the US (23.4%) and the UK (14.8%) alongside with institutional investors from Austria (17.4%). This shows that major investors from the UK and US have started investing more in Austrian stocks in the past year. "Investors from Germany, Norway, the United Arab Emirates and China have also increased their positions. In the past few years, we have been seeing growing diversification among major investors on the Austrian market. This is being driven by the strong presence of the Vienna Stock Exchange and its companies on many of the world’s major financial markets," commented Michael Buhl, Management Board Member of the Vienna Stock Exchange.
Upside potential for the ATX
The ATX declined in the period from January to September by 13.45%. If one factors in dividends, like in the ATX Total Return index, the net result is -11.38%. On average, investors in ATX stocks will receive a dividend yield of around three percent this year and some companies may pay up to six percent in annual dividends. The price development of the five largest stocks in the ATX was negative over the course of 2014, which is reflected in the development of the index. The ATX Global Players Index, which tracks the price trend of 15 companies with international activities also outside of Europe, outperformed the ATX by more than ten percent (01-09/2014: -1.18%).
Birgit Kuras explains: "Some of the largest Austrian companies listed on the Vienna Stock Exchange represent the financial sector, currently under pressure. The psychological factor also plays a role. The assumed ties to Eastern Europe are stronger than the actual numbers show."
After a rally in January (year-high 15 Jan. 2014: 2,729.07), in March the ATX lost its slight gain from February due to the situation in Ukraine. Interest rate cuts by the ECB at the beginning of June and September only provided temporary support for the ATX. The corrections seen in banking stocks triggered a high drop in the ATX that could not be offset by the effects of the interest rate cut. At the end of September, the ATX hit its all-year low (low on 29 Jan. 2014: 2,202.03). Analysts forecast price increases for the ATX until year-end, provided the geopolitical situation does not deteriorate.
"Experience shows us that regional markets like ours in Vienna move faster upwards in good times and drop more steeply in gloomier times. The current situation has potential because bad times on stock markets are excellent entry opportunities for investors," explained Michael Buhl.
New capital increase and shorter settlement cycle starting tomorrow
The Carinthian BKS Bank is raising fresh capital through the Vienna Stock Exchange. The subscription period opens tomorrow. The target is to achieve issuance proceeds of around EUR 52 million. Within the coming nine months, Telekom Austria is also expected to carry out a capital increase. The largest capital increases this year were carried out by Raiffeisen Bank International (EUR 2.78 billion) and Porr (EUR 120 million). In total, in the first three quarters of 2014, a volume of EUR 3.1 billion in capital was raised on the Vienna Stock Exchange.
Starting tomorrow, securities transactions on the Vienna Stock Exchange will be settled in only two days after execution instead of three days as up to now. This means that the process of exchanging securities for payments on the securities and cash accounts will be completed more quickly in the future. Financial institutions that are members of the clearing change will then have faster access to the capital they have deposited as collateral. Securities transactions on the Vienna Stock Exchange are settled and cleared by Central Counterparty Austria (CCP.A) and Oesterreichische Kontrollbank (OeKB).
About the Vienna Stock Exchange
The Vienna Stock Exchange is a 100% subsidiary of the CEE Stock Exchange Group (CEESEG) which includes the stock exchanges of Budapest, Ljubljana and Prague. The CEE Stock Exchange Group is the largest stock exchange group in the region. In addition to the four stock exchanges, CEESEG operates three commodity exchanges and holds stakes in five clearing systems (CCPs) and two central securities depositories (CSDs). CEESEG facilitates access and trading on the local markets with the aim of improving liquidity. The CEESEG stock exchanges cooperate with 12 exchanges in Central and Eastern Europe and are highly appreciated worldwide for their unique CEE know-how.