2017 was a very positive year for the global equity market against expectations from a majority of market participants. This went on for the beginning of this year. For the first time since 2007/08 we have a global growth scenario. This is in part attributable to the ultra-expansionary monetary policies of the leading global central banks, which are flooding the markets with liquidity. Corporations have also made their homework and prepared for the future. Also indebtedness of the corporate sector is lower than the years before the crisis, also thanks to the record low interest rates.
We are not at the beginning of an economic upturn, we are already in for a long time. The increase of momentum in the last quarters was the real surprise. This, in combination with low inflation, are the main drivers of the equity markets, corporate earnings have also increased and supported this development. As long as this is ongoing, we will see positive stock markets. Stocks are in a historical context not cheap, but compared to other asset classes like fixed income or real estate, they are still attractive.
The majority of Austrians have not participated from these positive effects. The addiction to savings books and the perceived security of those are the main obstacle for a second source of income. The asset base of the Austrian households is growing at a much slower pace than their neighbours. It is late in the cycle, but an addition of equities is always useful, at least in the long term. Equity investing is not only advantageous for the shareholders but also for the Austrian capital market as a whole.
Author:
Martin Bruckner,
Member of the Management Board
Allianz Investmentbank AG
CIO Allianz Group Austria
1 February 2018
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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.