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Good Prospects for ATX

Published: April 12, 2012; 11:52 · (Vindobona)

According to Paul Severin at Erste Asset Management, Austrian equities may face a significant upward trend.

Good Prospects for ATX / Picture: © Vindobona.org

“After the significant correction of the stock market again in 2011, the prospects for the ATX are much friendlier in the first quarter of 2012. Since the beginning of the year, the Vienna stock market reported a plus of 14%. With this the ATX performed significantly better than the pan-European EURO STOXX (+8%).” Severin says.

The drivers of this strong performance were especially the recuperating equities, the asset manager states. “Raiffeisen International increased by 25%, Erste Group gained 22.9%, same as Lenzing AG, which had a record annual result in 2011. Also in the TOP 5 are RHI with a plus of 22.7% and Wienerberger with a performance to date of 21.7%. Only three companies, EVN, Zumtobel and Telekom Austria, registered a negative performance in 2012 so far.”

The positive trend of the international stock markets as well as the Austrian exchange is driven by several factors, Severin argues. “First, positive news from the economy led to good economic sentiment. Examples are the OECD leading indicators which turned out better than expected. Moreover, the German IFO index showed an improvement of the economic climate. Apart from the good news from the economy, international stock markets also profited from the impulses by the central banks. The policies of the central banks continued to be (very) expansive. In the developed world "unconventional" monetary policies were used continuously such as the expansion of the purchase of bonds in the UK and Japan along with infinite liquidity of the euro-banks provided by the ECB. In the so-called Emerging Markets, monetary policy was also somewhat loosened. Most importantly were the decreases of the minimum reserve ratio in China and of the effective base interest rate in Turkey.”

Severin continues: “Greece was the first official default of a Euro-member. However, markets were not stressed by this news, on the contrary. The agreement over a new austerity plan for Greece had a positive impact on the stock markets.”

“We see the environment for equities still positive, even if short-term consolidation can be expected after the advances of the stock prices this year. Equity prices are fundamentally stable and companies present themselves solid considering their profit development as the overall economic situation stabilized. Central banks announced to further set impulses by their monetary policies. This should also continue to have a positive effect on the performance of stock markets.” Severin concludes.

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