While sadness was still the order of the day at the beginning of the year, there is now a party atmosphere in Vienna.

The Vienna Stock Exchange has left the crisis triggered by the corona pandemic behind.

The leading index ATX including dividends (ATX Total Return) rose by almost 25 percent in the first half of the year.

The ATX - calculated as a price index - also rose by almost a quarter.

It fared significantly better than many other indices, whereas it was heavily in the red last year.

Despite the strong growth, the ATX is still a long way from its high of around 5000 points in 2007.

Michaela Seiser

Business correspondent for Austria and Hungary based in Vienna.

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There have been comparatively few pure Covid crisis winners (e.g. as a result of online business or digitization), since cyclicals and financial stocks dominate. The Austrian Post, the petrochemical group OMV and the printed circuit board manufacturer AT&S were among the strongest price winners. The boom in Vienna can be explained by the composition of the sectors included in the leading index: financial stocks and cyclical stocks dominate. Barometers dominated in this way weaken in economic downturns, as the chief analyst of the Erste Group, Friedrich Mostböck, explains. However, they recover much more strongly in upswing phases, which is the case now. Roland Neuwirth, manager of Advisory Flexible Funds, argues with the marginal market status of the small country. “These small marginal markets tend to end up in a broad bull market.When the pasture has been grazed, participants turn to the small, as yet undiscovered areas. "

Recommendations from Erste Group Bank

According to economists, the prospects for the small economy have improved slightly again due to the progress made in vaccination and positive signals from world trade.

For this year, the EU Commission is anticipating an increase in gross domestic product (GDP) of 3.8 percent.

Nevertheless, Austria is at least this year below the EU average.

The upswing is likely to continue in the coming year.

With a growth of 4.5 percent, Austria will be in the EU and Eurozone average in 2022.

From the perspective of the Austrian Institute for Economic Research (WIFO), the gap to the growth path before the crisis will be closed by 2024. Compared to the scenario from January 2020, i.e. still without the Covid recession, the gap in the real level of gross domestic product (GDP) is estimated at just under one percent - with economic output at pre-crisis level in mid-2021. Unlike the recovery after the economic crisis in 2009, the recession-related one is likely WIFO believes that the GDP gap should be closed more quickly after the Covid 19 crisis.

The ATX is still valued significantly cheaper than many other markets. Erste Group and Raiffeisen Bank International have a price-earnings ratio (P / E) of 12.5 to 13. The discount of 15 percent over the past ten years has increased to 25 percent, says Bernd Maurer, Head of Institutional Equity Research the RBI. Analysts also see the dividend yield as attractive: 2020 (1.8 percent), 2021 (3.3 percent) and 2022 (3.7 percent). In addition, profit growth for the ATX is picking up again significantly after the decline.

Mostböck continues to assess the outlook as positive, as the economy is picking up again and interest rates will remain low in the long term, which in many cases makes the share no alternative. In contrast, Neuwirth sees the end of a very long bull market. “At the moment when Corona ends, the highest level has been reached / exceeded.” As long as the international markets, especially the USA, stay a little higher, Austria should add a few percent. Realistically it will hold 3700/3800 points until the end of the year, maybe 4000 if the banks are up again ”. Raiffeisen Bank International (RBI) is rather skeptical that the bull market will continue. The probability of a negative surprise has increased and that of a positive surprise has decreased, says Maurer. The economic recovery has already been priced in.RBI sees the ATX at 3500 points by the end of the year and at 3700 points over a twelve-month period.

Erste Group recommends the technology group Andritz with a target price of 58 euros. She also favors insurance company VIG with a target price of 32 euros. She also likes the biotech company Marinomed for developing innovative products for respiratory and eye diseases. RBI likes Telekom Austria, the insurance company Uniqa, the building materials specialist Wienerberger, the lighting manufacturer Zumtobel and the utility EVN. Neuwirth finds the chip manufacturer AT&S sexy, as well as the caterer Do & Co and the Austrian Post.