It is interesting that in the statistics it is always October that is written into the databases as a weak stock market month. So it was this time. Profits were taken, nervousness got the chance to break through a little, but the price declines were all quite soft. One or the other geopolitical risk factor is now coming into the status of execution, such as the certain realization of a European economy hovering just above the zero line, inflation that has fallen but has not yet motivated the central banks to stormily lower the tin and the finale of the US election, whose election campaign has recently been conducted more and more louder and more defamatory.
So far, 2024 has been a year in which many individual effects had all risen to a historically unexpected positive share price performance for many. Despite still high inflation at the beginning of the year, high interest rates until autumn, wars in Ukraine and the Middle East, the US election and a weak economy in Europe, the stock markets were largely up by double digits. Supported by a high bias towards passive investments that had made their way into the markets via ETFs, index funds or quantitatively controlled portfolios. Large caps therefore beat small caps again. The rating gap between these two groups grew to unprecedented dimensions in Europe. Why is that? Well, probably the many crises around us are one of the reasons. They try to be invested as much as possible with as few investments as possible in order to be able to sell again quickly when a crisis escalates. We dance just next to the door to the exit. Only if everyone does that, you won't be able to get out of it if the worst comes to the worst. The fall in Japan's stock market at the end of August, motivated by a minimal interest rate change by the Bank of Japan, was one such example.
The Austrian stock exchange's annual performance to date has been positive, but in some cases significantly behind other European benchmark indices. What Austria showed, however, was that in the long-term total return view, the ATX clearly outperforms some of the prominent comparison exchanges. The reason for this historically proven higher dividend yield lies in the regularly lower valuation of domestic shares, which is repeatedly cited as the reason for this lower absolute liquidity, but it is also a kind of self-defense of our listed companies to maintain their regular investorhood with the attractive distributions in the face of low public acceptance.
With the peak of the election in the USA, we will experience an interesting autumn and winter on the stock markets. On the one hand, global crises are imported into new power patterns, and on the other hand, economic trends are subjected to a new reality check. European politics will have to commit itself more and more to a supporting role and carry out reforms, investment incentives and the incredibly urgently needed reduction in bureaucracy and administration. These movements would then fall on fertile ground on the stock markets and there the fantasy hoped for so long could then combine with reality. An "economic miracle" in Europe could even be the result. The political solutions are now clearly visible.
The European stock exchanges, and in the middle of it the ATX, are currently among the most favourably valued markets in the world. If the parameters of growth, investment promotion and bureaucracy reduction revolve, this should be able to result in a great stock market performance.
And the Vienna Stock Exchange is one of the most attractive candidates for such a development.
Author:
Wolfgang Matejka, CEFA
Managing Director of Matejka & Partner Asset Management GmbH
6 November 2024
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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.