(Vienna) The Vienna Stock Exchange was confronted with an adverse environment in 2011. All European stock exchanges struggled with declining stocks caused by the global economic crisis and the worsening sovereign debt crisis. The situation caused IPOs to come practically to a standstill throughout Europe; on the Vienna Stock Exchange, there was one IPO (AMAG) and four capital increases this year. Trading volumes in equities also decreased on most European stock exchanges. On the Vienna Stock Exchange, the trading volume in domestic stocks in monetary terms was 18% lower than in the previous year. Nonetheless, the companies listed on the Vienna Stock Exchange appealed to banks and investors, and the number of trades rose by 6% year-on-year.
The members of the Management Board of Wiener Börse AG, Michael Buhl and Heinrich Schaller, expect 2012 to be volatile as well. Should the market environment take an unexpected turn and develop positively, the members of the management board are optimistic and expect stocks to return to pre-crisis levels and new initial public offerings. “We believe the present trend is one of short IPO windows and we know of listing candidates waiting for the right moment,” said Michael Buhl.
Regulated markets prove their worth in the crisis
One of the main reasons for the persistent insecurity in the opinion of the management board of the Vienna Stock Exchange is the growing lack of transparency on off-exchange financial markets. In Europe, an average of 47% of trading in equities takes place through stock exchanges, the share of off-exchange trading is 38% and the rest is accounted for by the so-called multilateral trading platforms (MTFs). In derivatives, off-exchange trading plays an even greater role than stock exchanges. “The regulated markets have proven their worth in the crisis, a fact ignored by policymakers. On the contrary, in the EU, and also in Austria, the various measures being deliberated concern only the regulated markets and are moreover detrimental to these,” criticized Heinrich Schaller.
The only measure that the Vienna Stock Exchange welcomes is the decision of the European Commission to also tax off-exchange transactions in order to check the migration of trading from stock exchanges to the off-floor platforms. The Vienna Stock Exchange views taxation of exchange trading in stocks and bonds critically, because this has direct -- negative -- effects on the real economy: “It is to be expected that the introduction of a financial transactions tax on equity transactions will lower liquidity on financial markets. Therefore, companies will have a harder time securing sufficient equity capital. When a company’s capital base is low, production activity decreases. Moreover, higher capital costs depress corporate spending and thereby lower productivity, and ultimately, the European economies would have to bear the burden of the taxation and this would lower the international competitiveness of Europe even further,” emphasized Michael Buhl.
In Austria, the additional capital gains tax on securities is restricting liquidity on the Vienna Stock Exchange and also other tax ideas “hostile to capital markets” such as the re-introduction of the wealth tax and the inheritance tax or a possible surcharge on income tax are detracting from the attractiveness of the Austrian capital market and scaring away international investors. And international investors are very important for the domestic capital market: The largest investors still come from the US and Great Britain.
Review of 2011 in detail
The ATX, the leading index of the Vienna Stock Exchange, recorded a drop of 34,87 % from 3 January 2011 to 29 December. The ATX was 1.891,68 points on the last day of trading. The declining prices are reflected in the development of monthly trading volumes: equity trading stagnated or dropped on most international stock exchanges in the past year. Trading volumes in money terms on the Vienna Stock Exchange amounted to EUR 59.6 billion for domestic stocks which is a decrease of 18% vs. the previous year. However, the number of transactions executed was 6% higher in 2011 than in 2010.
Market capitalization as of 29 December 2011 was EUR 65.68 billion (year-end 2010: EUR 93.94 billion). In 2011, a total of EUR 1.3 billion in fresh capital flowed into the Vienna Stock Exchange (EUR 412 million from public offerings and EUR 898 million from capital increases).
About the Vienna Stock Exchange
The Vienna Stock Exchange is a 100% subsidiary of the CEE Stock Exchange Group (CEESEG) which also includes the stock exchanges of Budapest, Ljubljana and Prague. The CEE Stock Exchange Group is the largest stock exchange group in the region CEESEG makes market access and trading easier to increase liquidity on the local exchanges. The CEESEG stock exchanges cooperate with 12 stock exchanges in Central and Eastern Europe and are recognized throughout the world for this unique know-how.