Looking back, 2019 has become a very friendly stock-performance year. Memories about mounting selling-pressure in the 4th quarter 2018 are fading. But what has changed since then, have problems been solved which were in focus 12 months ago? Trade conflict, weakening economic growth and a volatile political climate are as before on the forefront of topics. Central banks make the difference. Reality points that positive performance on capital markets has become part of their main focus.
One more strong argument for a continuation of positively trending capital markets is Donald Trump. His strong focus on Dow Jones Index and the next US-presidential elections limits the potential for way too aggressive actions (the next increase in tariffs on Chinese products is set for 15th of December. But there is still room to postpone this step – possibly as an alternative, just recently, new tariffs on steel and aluminum imported from Brazil and Argentina were announced). Of course also within the coming months threats and emotionally driven announcements cannot be ruled out. On the other hand Donald Trump´s mid-term goals are making his moves more predictable. From a European standpoint, high attention must be paid on ongoing trade-discussions between EU and US. Threats of introducing US-import-taxes for European cars is a serious topic. In general, the automobile sector is one of central parts being in discussion besides agricultural- and tech-sectors.
The weakening demand for cars is a direct hit to Austria's economy. Reasons for the unsatisfying sales numbers are not only based on (possible) tariffs. New innovations concerning driving and steering systems are affecting as well. It is unclear for consumers which technology to choose. Austrian listed companies like Andritz, Polytec and voestalpine are dependent on the car industry. Investors currently are shying away of this sector. Otherwise, after changes in technology are settling, demand for those products often is increasing.
Author:
Bernhard Ruttenstorfer
Senior Fund Manager
Erste Asset Management
6 December 2019
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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.