Even long experienced stock-market experts have to realize that over the months and years the job has changed dramatically. Aren't we supposed to analyse, to understand and to evaluate enterprises? We are doing it – as we have always done it. But are we rewarded for this work? Or hasn't been any development of the stock-market recently been depending on the activities of the central banks in Frankfurt, New York or Tokio. Over weeks the markets have been discussing the possibility of changing interest rates in the USA and every word said by Fed Chair Janet Yellen has been interpreted for days. And recently even in Europe a new political age has started after the BREXIT. Should the long experienced and convinced stock-picker resign in this environment? NO.
On the long run the quality of a well managed company is always honored – whatever the environment of the central banks or politics will be in the meantime. So also in this commentary on the Vienna Stock Exchange I am not going to philosophize about the possible consequences of the BREXIT. Only one consequence is guaranteed: The zero- or negative interest environment is more than ever a fixed fact.
So I only want to ask myself the simple question: Which companies have visions for their future and therefore will generate additional value for me as an investor. And furthermore the investors expect a sustainable dividend in return. Because of the previously mentioned interest environment this will be the most important argument for buying stocks.
On the Vienna Stock Market we can find different investment stories. There are on the one hand long established and therefore calculabe companies. On the other hand there are companies, which are in a transformational process – both bear chances as well as risks by nature. Following I am going to give some examples of our Austrian top holdings.
Mayr-Melnhof is classified as a largely sound enterprise with healthy finance structure, defensive communication but wise expansion strategy. Packaging remains a stable business. The dividend policy is traceable and convincing on the long run.
Palfinger has committed itself to expansion and has recently bought attractive companies in the marine sector. Everywhere in the world, where heavy loads have to be lifted, Palfinger wants to be part of the market. Palfinger's position on the world market is impressing – this will not be changed by the BREXIT.
AT&S has bravely invested in a new business area to be more diversified. Yields will be gained in the following years. 2016 is the year of transformation. But especially in the IT-sector a standstill would mean a setback.
The real estate market in London is going to change to the worse. In contrary to that the market in Frankfurt especially and in Germany in general will have tailwind due to the zero-interest-politics of the ECB. As an example, CA Immo is going to profit from this development.
My conclusion is: Especially during these turbulent days it is better to focus on profitable companies than to read the umpteenth political article on the BREXIT-consequences.
Author:
Alois Wögerbauer, CIIA
Executive of 3 Banken-Generali Investment-Gesellschaft m.b.H.
29 June 2016
Note
Wiener Börse AG would explicitly like to point out that the data and calculations given in this report are historic values, which do not permit any conclusions as regards future developments or value stability. Price fluctuations and loss of capital are possible in securities trading. The contribution is the personal opinion of the analyst and does not constitute a financial analysis or a recommendation for investment by the exchange operating company, Wiener Börse AG.