ATX on Holiday

  • Sideways movement should continue for a few weeks
  • Recovery by the end of the year

The Vienna Stock Exchange is not expected to generate much excitement during the summer months with all indicators pointing to a sideways movement. “By the end of the year, however, the ATX should recover, although there is a danger that the lows seen in the middle of June could be tested again," said Alfred Reisenberger, head of equity research Austria of CA IB International Markets AG.

Generally, there is an international trend away from small and medium caps, because their valuations are now much higher than those of the large caps. However, the ATX is once again proving that it is different. With a price-earnings-ratio of 13.1, the ATX is far closer to the DAX (14.5) and S&P 500 (14) than to the classic medium cap indices (MDAX: 15.5 and Russell 2000: 29). The reason for this is the positive valuation of Austrian companies and their favourable earnings performance.

In the short term, volatility in Vienna can certainly remain high, due among other factors to external influences. Investors are concerned about inflation, the direction of interest rates, political conflicts and their impact on the oil price. Furthermore, it will be necessary to wait and see how second quarter profits have turned out. However, the ATX has a chance of recovering by the end of the year and closing the year at around 3,900-4,000 points.

Criteria for Investors
It remains advisable not to buy the entire market, but to look at companies individually and scrutinise them according to a number of criteria. Cyclical stocks are not investors' favourites at the moment, even though they are favourably priced in Vienna and offer an excellent outlook.

Although CA IB’s recommendation list still includes cyclical stocks, in the short and medium term, Reisenberger recommends shares with a defensive character. These include Österreichische Post, Conwert, Century Casinos and Verbund. He also advises investors to buy OMV, where strong profit growth is once again expected due to record oil prices.

Enquiries: Bank Austria Creditanstalt International Markets 
Veronika Fischer-Rief, Tel. +43 (0)5 05 05 ext. 82833;
E-mail: veronika.fischer-rief@ba-ca.com