The year 2024 is charactarized by a long list of potential turning points. Elections are to be held all around the world, from India in the East, the European Union and Austria in the middle to the US in the West. What will their outcomes mean for economic conditions, international trade and geopolitics? Will Western central banks finally be moving from „behind the curve“ to the fast line? How sustainable is the ongoing process of disinflation, the strong labor market, the path to decarbonisation, the AI boom? While all this could substantially alter international economic conditions, the domestic economy in Austria (as well as in Germany) are struggling with shallow demand and endangered competitiveness.
Most stock markets have continued the 2023 year end rallye during the first two months in 2024. The ATX, however, has still been lagging behind its international peers. The soft patch in oft the industrial business cycle is only one of the factors behind that lag. With few exemptions, booming sectors as IT, producers of obesity and diabetes drugs or defense. However, for an export and interest rate driven recovery, the baseline scenario for the European economy in the quarters to come, the ATX seems positioned quite better. Catching-up in the automobile sector where stocks have started to recover will eventually also be felt on the Austrian equity market where various supliers to that industry are listed.
The valuation gap oft he ATX is quite sizeable. On February 27, PER-Estimates for the ATX ranged from 7.2 for 2025 and 7.8 for 2024. The range for the DAX was 9.9 to 12.5, estimates for the S&P500 lay between 16.9 and 18.6. The ATX thus has a very long way to go. Other than the small-cap dominated ATX, larger markets benefit from passive investment strategies replicating internationale markets. If compared to he DAX, there is also a structural disadvantage due to the calculation method. While the ATX calculated as price index excluding dividends, the calculation of the DAX assumes that dividend payments are fully reinvested. This really makes a difference with current dividend yields ranging from 3% for the DAX and nearly 6% for the ATX. Even though it seems unlikely that the ATX will be able to fully close the valuation gap due to the differences in the size and sectoral structure of the Austrian stock market, the latter offers attractive investment opportunities in terms of dividend yields and not every hype that has been missed on the Austrian market will really make a difference in the longer term.
Author:
Uta Pock
Senior Research Analyst
VOLKSBANK WIEN AG
29 February 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.