Investors are currently courting the peripheral market of Vienna.

Since the beginning of the year, the Austrian leading index ATX has clearly outperformed other European barometers with an increase of more than a third.

The ATX including dividends (ATX Total Return) rose by around 34 percent, three times more than the Dax.

The ATX - calculated as a price index - also rose by more than a third.

In contrast, the Austro stock exchange index fell sharply in the first year of the corona pandemic.

Michaela Seiser

Business correspondent for Austria and Hungary based in Vienna.

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The fact that stock marketers are currently in great demand for stocks from the small Central European country is related to the composition of the leading index.

Banks and insurance companies are strongly represented there, as are companies with a cyclical orientation.

"In economic downturns like 2020 the ATX loses more, in upswings it can gain more due to the cyclical components", explains the chief analyst of the Erste Group, Fritz Mostböck.

Above all, the financial load makes the market very attractive at the moment, thinks Roland Neuwirth, fund manager of Advisory Invest. The banks are benefiting from rising interest rates in their expanded home market, as the tightening of monetary policy in Central and Eastern Europe shows. At the same time, there have been hardly any risk costs since the outbreak of the crisis. Neuwirth believes that the fourth lockdown, which Austria has been in for a week to around mid-December because of its rapidly increasing infection rate, will not change that dramatically.

The immunization of the population barely reaches the two-thirds threshold.

This is still a long way from the four-fifths mark above which the spread can be kept in check.

The government of the Conservatives and the Greens responded to this vaccination skepticism with mandatory vaccination, which will not come into force until February.

The market is also valued comparatively cheaply

In addition to the dominance of financial institutions, the energy load also makes up part of the attractiveness. The petrochemical specialist OMV benefits from high prices for crude oil and natural gas as well as the very good chemical business. Business has also picked up again at the oil field supplier SBO and seems to have turned the corner. In addition, the energy suppliers Verbund and EVN are riding the electricity price rally, over coal and natural gas and higher CO2 prices. Swiss Post is benefiting from an increasing number of parcel deliveries. “The insurers benefit from the fact that people drive less car, but obviously much more from the fact that they drive less drunk,” says Neuwirth. Telekom Austria, on the other hand, has a tailwind from the increased work from home, although at the same time the income from tourist roaming is lost.

The market is still valued as comparatively cheap.

Erste Group expects a price / earnings ratio (P / E) of 10.5 for the current year and 10.0 for the coming year.

Chief analyst Mostböck also rates the dividend yield as attractive at 3.6 percent and 3.8 percent for 2022. After the sharp bend last year, earnings growth of almost 150 percent is extremely strong again according to Erste Group and should also increase to tighten slightly next year.

Because of the infection, the growth prospects are weaker than expected in late summer.

The economy in Central and Eastern Europe creates good prospects

The Austrian Institute for Economic Research (WIFO) predicts that there will no longer be a five-digit before the decimal point next year. The reason for this is that economists are expecting an even weaker start to the year than they have so far. For the growth forecast for this year, not much will change due to the current stalemate, says WIFO. The 4.4 percent could remain if the lockdown doesn't get stricter or longer.

The outlook for the stock market continues to be positive, as the economy is picking up again, especially in Central and Eastern Europe, and there is still potential to catch up.

“As a result of the low interest rates, there is often no alternative to the share,” argues Mostböck.

Fund manager Neuwirth believes that Austria could do very well in 2022 due to the good profit development and as a laggard.

"4000 points in the ATX are not impossible."

In this environment, Raiffeisen Bank International recommends Telekom Austria, as well as the insurance company Uniqa, the lighting specialist Zumtobel as well as the fiber manufacturer Lenzing and the building materials group Wienerberger.

At Neuwirth, the sugar producer Agrana is very popular because of the current boom in sugar prices, as well as the circuit board specialist AT&S, the Erste Group and Raiffeisen Bank International and the oil field supplier SBO.

Erste Group prefers the mechanical engineering company Andritz with a price target of 60 euros.