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Comment: Outlook of Vienna Stock Exchange

Published: August 7, 2014; 12:55 · (Vindobona)

Manfred Sibrawa of BAWAG PSK INVEST GmbH comments on the expectation of the performance of the Vienna Stock Exchange until year end. Erste Bank and Raiffeisen Bank International, but also OMV, booked double-digit losses, while the Vienna Stock Exchange welcomed a new member, FACC. "All in all we saw a mixed development year-to-date, but assuming that we see a stabilization of the global situation we can expect the Vienna ATX to speed up and reduce the underperformance towards other established markets."

Comment: Outlook of Vienna Stock Exchange / Picture: © BAWAG P.S.K. INVEST

"The performance of the Vienna Stock Exchange year-to-date is quite unconvincing. While US, European as well as Eastern European markets are all in positive territory, the ATX is in the red. The reason is obvious. Index heavyweights of the financial sector, Erste Bank and Raiffeisen International, but also OMV, booked double-digit losses. The 50% gain of Zumtobel unfortunately doesn't help the ATX, as the weighting is minor. Troubles in Eastern Europe caused a profit warning in Erste Bank. Raiffeisen came under pressure due to its Ukraine and Russia exposure. Additionally the global situation, above all in Libyia, Iraq or Israel doesn't help either. Not enough, Austria managed to be in international focus with a very controversial law regarding Hypo Alpe Adria.

On the positive side, the Vienna Stock Exchange welcomes a new company. In June shares of FACC, a company producing aerospace parts, traded for the first time. The IPO went smoothly and enriched the Vienna Stock Exchange not only with a new member, but also with a new, so far underrepresented, sector.

Assuming all above mentioned news are priced in, the next earnings season should bring no surprise. The index heavyweights reached levels from where one should expect some rebound. But the key to success is growth. In the coming months companies should deliver positive results and growth in order to launch a rally on the stock exchange.

Furthermore there are some extraordinary events to watch in Vienna. The takeover bid in Telekom Austria is valid until the autumn and the issue of new shares is ongoing, but further details are still unknown. Unicredit/Bank Austria announced the intention to sell their stake in CA Immobilien AG. As this is a very interesting stake, including four golden shares with special rights, there could be a couple of potential buyers which could drive the share price further up. Another real estate company, Conwert, could see some turbulence, as there is a legal lawsuit pending after the turmoil during the latest Annual General Meeting.

All in all we saw a mixed development year-to-date, but assuming that we see a stabilization of the global situation we can expect the Vienna ATX to speed up and reduce the underperformance towards other established markets."

Author:
Manfred Sibrawa, CEFA, CIIA
Senior Fund Manager Equities
Head of Eastern Europe
BAWAG PSK INVEST GmbH

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