13.01.2022
Outlook for stock markets & the Vienna Stock Exchange in 2022: “Between a pandemic and an upswing“
- Vienna’s blue-chip index ATX outpaced its international peers in 2021
- Solid GDP growth expected in Austria and CEE in 2022
- Equities as protection against inflation: attractive valuations and dividend yields
- ATX benefits from its composition, shows further upside potential
The Vienna Stock Exchange’s blue-chip index ATX clearly outperformed its international peers in 2021. Even if the pandemic is not yet over, 2022 should be a year characterized by a further economic recovery. The record results that the ATX’s firm are expected to post for 2021 could be surpassed again in 2022, even if the momentum is likely to weaken significantly. The still attractive valuation of Austria's leading index despite the high price gains achieved in the past year has led to international investors again showing increased interest in Vienna-listed shares. The market’s overall return to value stocks should also continue to favor the ATX’s develop-ment.
The Vienna Stock Exchange’s blue-chip index ATX clearly outperformed its international peers in 2021. Even if the pandemic is not yet over, 2022 should be a year characterized by a further economic recovery. The record results that the ATX’s firm are expected to post for 2021 could be surpassed again in 2022, even if the momentum is likely to weaken significantly. The still attractive valuation of Austria's leading index despite the high price gains achieved in the past year has led to international investors again showing increased interest in Vienna-listed shares. The market’s overall return to value stocks should also continue to favor the ATX’s develop-ment.
Shares remain attractive, also against the background of increased inflation. „The year 2021 saw the pendulum for Austrian equities swing back up due to strong corporate results. The ATX was a clear outperformer internationally. Even though the momentum will slow down significantly in 2022 after last year’s record results, we see further upside potential. That is also true in light of rising inflation, as companies have to pass on price increases in the long term and will thus benefit from higher sales volumes and profits,” says Fritz Mostböck, Division Head of Group Research at Erste Group.
- Economic recovery should continue this year
- The profit level of ATX companies should at least be maintained in 2022, despite the massive increase in earnings in the past year (+155%); we even forecast a slight increase of 3%.
- Valuation remains attractive (P/E ratio 2022e: 10.6x and dividend yield 2022e: 3.6%)
- The spread between earnings yield on equities and 10Y government bonds is high (2022e: +925 bps),
- ATX price target for year-end 2022: 4,500 points; top picks: Andritz and OMV
ATX bolstered by positive outlook especially for Banks, Oil & Gas and Automotive sectors.
„The combination of favorable valuations and expected earnings momentum in 2022 make the Banks, Oil & Gas and Automotive sectors look particularly attractive. The ATX should benefit from its composition, given the high weighting or importance these sectors have in the index," says Christoph Schultes, Chief Equity Analyst for Austria at Erste Group. "Our price target of 4,500 index points is not overly aggressive. It implies a price/earnings ratio of only 12x and is still well below the historical average," Schultes points out. "With regard to individual stocks, we prefer Andritz and OMV, besides these we are also focussing on AT&S, Palfinger, SBO, Polytec and DO & CO. We currently see the most attractive dividend yields being provided by UNIQA, VIG, UBM, Porr and Österreichische Post. The share prices of STRABAG, Immofinanz and S Immo could benefit from a change in their shareholder structures or from takeovers,“ says Christoph Schultes.
The ATX is increasingly moving back into international focus, while the CEE region remains a driving force for listed companies from Austria.
The pandemic will not change this dynamic and the region’s long-term catch-up potential remains intact. „The outstanding performance that the ATX posted last year has put the Vienna Stock Exchange back in the spotlight. International investors are looking for alternatives to larger and more highly valued markets and they are also willing to once again take on the risks with investments in individual stocks. The ATX offers many interesting stocks with attractive valuations. In our opinion, the strong earnings development of the past year has not yet been fully priced in, which is why we expect further double-digit share price growth in 2022,“ concludes Fritz Mostböck, Head of Group Research.
ATX bolstered by positive outlook especially for Banks, Oil & Gas and Automotive sectors.
„The combination of favorable valuations and expected earnings momentum in 2022 make the Banks, Oil & Gas and Automotive sectors look particularly attractive. The ATX should benefit from its composition, given the high weighting or importance these sectors have in the index," says Christoph Schultes, Chief Equity Analyst for Austria at Erste Group. "Our price target of 4,500 index points is not overly aggressive. It implies a price/earnings ratio of only 12x and is still well below the historical average," Schultes points out. "With regard to individual stocks, we prefer Andritz and OMV, besides these we are also focussing on AT&S, Palfinger, SBO, Polytec and DO & CO. We currently see the most attractive dividend yields being provided by UNIQA, VIG, UBM, Porr and Österreichische Post. The share prices of STRABAG, Immofinanz and S Immo could benefit from a change in their shareholder structures or from takeovers,“ says Christoph Schultes.
The ATX is increasingly moving back into international focus, while the CEE region remains a driving force for listed companies from Austria.
The pandemic will not change this dynamic and the region’s long-term catch-up potential remains intact. „The outstanding performance that the ATX posted last year has put the Vienna Stock Exchange back in the spotlight. International investors are looking for alternatives to larger and more highly valued markets and they are also willing to once again take on the risks with investments in individual stocks. The ATX offers many interesting stocks with attractive valuations. In our opinion, the strong earnings development of the past year has not yet been fully priced in, which is why we expect further double-digit share price growth in 2022,“ concludes Fritz Mostböck, Head of Group Research.