The backdrop looked rather grim: since spring, global stock markets were burdened by a sharp rise in interest rates. Inflation was stickier than (admittedly rather optimistic) investors expected, meaning the long-awaited turning point for interest rates got pushed back further and further. This might remind you of the holy grail of the energy transition, nuclear fusion, which according to an old saying is just 10 years in the future since over 40 years. When it comes to interest rates, we could expect a turn in 2 quarters so we should see the first steps in the summer of 2024. As we say in Austria: “schau ma mal” (let’s see). In addition to the discussion about interest rate, another issue arose in November: the war in the Near East. Among the horrible images that reach us from the region, the constant focus on markets seems to lose its importance. Therefore, just a brief summary of the implications: initially, the price of oil rose sharply due to fears about a potential further escalation of the conflict, which would again put upward pressure on inflation. Fortunately, this scenario seems more unlikely at this point, which led to a reversal of the sharp price increase for oil. Consequently, the stock market started its long-awaited year end rally. The initial swoosh benefitted mainly tech stock, which were already investor darlings since the beginning of the year. Soon however, the rally broadened to include companies that lost out on the previous march higher, making them look “cheap” in comparison. This is especially true for the Austrian market, which was largely overlooked by investors so far this year. Usually, banks and cyclical industrials are not the most attractive place to invest if you believe in a downturn next year. While earnings were not as bad as initially feared, they were far from great. As a result, bargain hunters can find numerous opportunities in the Austrian market. The banks are not only cheap versus historical valuations, but they also offer attractive dividend yields. Our industrial companies are still among the market leaders in their respective niches, which means they can more easily pass on higher costs (especially personnel) than some of their weaker peers. And in some rare cases, you can also find enticing growth stock like Do & Co, which would be the envy of American growth fund managers with their strong outlook. Let us hope that positive mood of the last few weeks persists, and the stock market can stage a nice final sprint into the end of the year. A bit of Christmas cheer and some calm time would do wonders for all of us.
Author:
Bernhard Haas, Erste Asset Management GmbH
Fund manager
27 November 2023
 |  |
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.