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12.12.2007

Bleak prospects for Austrian stocks and Austrian football in 2008

  • Time to pick stocks carefully
  • Difficult first six months


Regardless of which index one looks at, the development of prices on the Vienna stock exchange is expected be on the lower end of the success scale in 2008. Investors have lost their desire to invest in mid caps and small caps, which represent the majority of listed shares in Austria. The outlook remains rather bleak in light of the continuing risks on the market. However, since there are still a few isolated promising stocks on the Vienna stock exchange, Alfred Reisenberger, director of UniCredit’s Stock Analysis Austria, expects that domestic investors will pay more attention to the stock market than to football in 2008.

Volatility has increased dramatically since November, which can be seen as a clear sign of investor anxiety. And for the first time since the fourth quarter of 2002, the ATX is expected to perform negatively in two consecutive quarters. After a weak third quarter, the fourth quarter promises little hope for improvement. Banks and cyclicals have been hit the hardest as there has been much less demand for these stocks due to the crisis on the financial markets and the significant increase in oil prices.

The coming year will also be characterised by rising inflation, falling earnings growth and a U.S. dollar that will put pressure on the European economy. Patience will be in high demand, especially in the first six months of the year, when the market will alternate between periods of extreme volatility and quieter recovery phases.

Real estate stocks are being seen in a new light
Investors have clearly changed their approach to Austrian real estate stocks in recent months. They have become more cautious and have started relying exclusively on the net asset value excluding revaluation surpluses for development projects as a value indicator. Meanwhile, real estate stocks have recovered from their record low prices, which Reisenberger sees as a sign that the worst of it is over.

Recommendations
UniCredit’s analysts recommend that investors act very cautiously and concentrate on individual stocks. While cyclical stocks have been shaken quite badly in recent months, the price development of defensive stocks has been very positive. As a result, UniCredit analysts have made their top recommendation the defensive stocks Post and Flughafen Wien, which are quite impressive due to their high dividend returns. Thanks to the climbing oil prices, SBO and OMV have also made the list of stocks to buy.

Enquiries: Veronika Fischer-Rief
UniCredit Markets & Investment Banking, Public Relations
Tel. +43 50505-82833,
veronika.fischer-rief@ba-ca.com