Green Austria

"These dynamic developments are the result
of our long-term measures aimed at strengthening
the Austrian capital market", enthused
Minister of Finance Karl-Heinz Grasser back
in June 2005, when the ATX passed the important
psychological barrier of 3,000 points.
However, for experts, that is only part of the
truth. Whilst the improved market conditions
for listed companies, such as corporate tax reductions
and the introduction of group taxation,
have important resonances for the capital market,
these developments alone cannot explain
the massive upswing.
There have been three driving forces behind
the continuing success of the Vienna Stock
Exchange: tax reforms, the enlargement of the
European Union and the improved competitiveness
of Austrian businesses. The latter factor
is too often ignored. Austrian businesses,
especially the industries, have been subject of
an enormous drive for modernisation, which
has resulted in unit labour costs and productivity
now ranking amongst the highest in the
world. A considerable portion of the increased
profits reported by listed companies is due to
this factor.
The momentum provided by the enlargement
of the EU should continue into the longterm,
according to Michael Buhl, member of
the Board of the Vienna Stock Exchange:
"Around 80 per cent of the enterprises listed
on the ATX operate in Eastern Europe. The
dynamic economic growth experienced by
the region will continue to play a defining
role in the coming years." RZB head analyst
Peter Brezinschek, one of Austria's best known
capital market experts, expects that the positive
developments of the domestic capital
market are unlikely to end abruptly: "Austria
has implemented important reforms and
improved structural conditions that provide
the basis for economic growth and a
positive grounding for the capital market over
the next ten years."
Catalyst for the Business Location
The sharp rise in the share index is only part
of the success story of the Vienna Stock
Exchange. Revenues have been developing
positively and the opportunities for Austria
businesses to raise capital through the Stock
Exchange in order to finance their expansion,
has also been bettered dramatically.
An important economic indicator of the financial
market in Austria is stock market ca-
Investing in Austria / Financial Market*
pitalisation. In addition to the rising share prices,
capital increases and new share issues are
also responsible for the development of this figure.
Market capitalisation as a percentage of
the gross domestic product in Austria has increased
by over 36 per cent to 41 per cent today.
"The main reason for this increase were
the gains made by the share index, which increased
by around 35 billion Euro; but new
share issues worth 5.4 billion Euro have also
played an important role in the overall picture",
says Markus Fichtinger, CEO at Aktienforum.
After five IPOs and 18 capital increases
in the last year, optimism is increasing that the
coming year an even higher number of businesses
will take the plunge and be listed on the
Stock Exchange. A study by the Institute for
Industrial Research determined that there are
potentially around 170 businesses that would
like to be listed on the Stock Exchange and
fulfil the necessary requirements.
In 2004, an average day at the Stock Exchange
would see shares worth approximately 160
million Euro traded; in 2005 the figure was already
299 million, an increase of 87 per cent.
Stock market capitalisation increased by more
than 150 per cent; the bond market followed
not far behind with growth of 104 per cent. An
end to these developments is not in sight. Experts
at RZB (Raiffeisen Zentralbank) forecast
that market capitalisation should increase twofold
by 2014, from 60 billion Euro today.
The entire Austrian economy is profiting from
the rallying on the Vienna Stock Exchange,
which makes new capital available for new investments
and thus creates and secures new
jobs in the country. According to a report by
IHS Consulting, a fivefold increase in turnover
on the Stock Exchange results in a GDP increase
of 0.4 per cent, or around 850 million
Euro per year. The same increase reduces unemployment
by 0.6 per cent, or 21,000 jobs.
But above all, Austrian businesses are better
able than ever before to finance themselves
via the stock exchange. With 6.4 billion Euro
in capital having been raised through the Stock
Exchange in 2005, an impressive record figure
was reached. However, this record will not
last long; this amount has already been reached
in the first half of 2006. "The Vienna Stock
Exchange has developed to become an internationally
recognised financial market", according
to the Board of the Stock Exchange.
According to Michael Buhl, 54.5 per cent of
trade volume comes from international members.
The fact that Austrians themselves still
Michael Buhl, member of the
board at the Vienna Stock Exchange:
"Around 80 percent of
the enterprises listed on the ATX
operate in Eastern Europe. The
dynamic economic growth experienced
by the region will continue
to play a defining role in
the coming years."
02/2006 LOCATIONAUSTRIA 55