(Vienna) The Austrian capital market has developed into an important driving force of the Austrian economy. This statement is the finding of the study "Enlarged Benchmarking of the Austria Capital Market" by the Institute for Advanced Studies (Institut für Höhere Studien, IHS) in cooperation with the Economic and Social Research Center (ESCE). The study documents the successful development of the Austrian capital market in the past few years and gives an outlook for the future development potential of the financial marketplace of Vienna.
Trading volumes of Wiener Börse have risen fourfold and market capitalization had doubled during the period reviewed 2003 to 2005, thus boosting the real economy in Austria significantly. In concrete terms – as shown by the calculations in the study – the excellent development of Wiener Börse during this period contributed EUR 1.1bn to gross domestic product. This corresponds to an increase in Austria’s gross domestic product by a total of 0.3% percentage points. The positive effects also feed through to the labour market. According to the calculations of the study, the increase in trading volumes and market capitalization in the years 2003 to 2005 in Austria raised the number of jobs by 5,900.
"The increase in market capitalization is not based on the price rally of just a few listed companies, but rather on the sustainable widening of the investor base, which is reflected in the steeply rising trading volumes," said Heinrich Schaller, member of the management board of Wiener Börse AG. "Our joint efforts have been successful and liquidity and investor interest have risen in the past few years to a spectacular extent," explained Mr. Schaller.
"The figures arrived at in the study are an impressive confirmation that the relationship between a dynamic capital market and a booming economy in fact does exists," stressed Karl-Heinz Grasser, Federal Minister of Finance. The revival of the stock market in Vienna is the fruit of enormous efforts and the Austrian government has taken a number of measures in the past few years that contribute to the dynamic development of the capital market. "The usefulness of further measures to help boost trading volumes and market capitalization further is well documented in the study. Such action includes, above all, capital market policy measures such as the further development of retirement provisioning schemes and the more employee participation schemes," said Mr. Grasser.
How the exchange has caught up in European comparison
In European comparison, the Austrian capital market improved from its below-average starting situation in 2002 to a solid centerfield position: As revealed by a cluster analysis, a relatively large group of leading European capital markets, especially Scandinavia and Great Britain, were identified in the year 2005. At the other end of the scale are the four new EU member states of Poland, Slovakia, Czech Republic, and Hungary as well as Portugal. The two groups in between include, among others, Germany, France, Italy – and Austria, which has succeeded in substantially improving its positioning in the past three years and now belongs to the second group for the first time.
The cluster analysis points out a wide dispersion of the indicators for Austria. This means that Austria ranks very high in some indicators, but in others far below the average. Austria is above the average, for example, in net volume of fresh capital raised through IPOs and capital increases. Despite the dynamic catching up process, which is reflected in the sharp rise in exchange trading volumes, Wiener Börse's position still has room for further improvement. Trading volumes were doubled in 2005 monthly to EUR 6bn, and in the first months of this year, another sharp rise to EUR 11.2bn was posted on the monthly average from January to May. "This entails special opportunities and risks: Should the exchange succeed in eliminating the still existing weaknesses and reinforcing and enlarging its strengths, on the three year horizon another significant improvement in ranking would be feasible vs. other European countries. However, should the current strengths weaken, this would mean an immediate loss in ranking," stressed Bernhard Felderer, Head of the Institute for Advanced Studies.
In the coming years, the measures on the agenda of Wiener Börse will focus on improving liquidity such as the acquisition of new issuers and new – especially international – trading members. A further improvement of the economic framework conditions is crucial for the future development of the Austrian capital market according to exchange management board member Mr. Schaller.