Looking east and well beyond
At the end of last year, a new stock exchange was unveiled in Vienna – the New Europe Exchange. It typifies the Austrian financial markets: it’s a joint venture with a German partner aimed at trading equities of central and eastern European companies. Austrian banks have long known they cannot survive on the meagre profits at home. Increasingly their search for new business will lead them beyond even near neighbours.
Irrespective of long-term prospects, the launch of the New Europe Exchange (Newex) in November is neatly illustrative of the three principal trends that now characterize the Austrian financial services sector and its capital markets. The first of these is that if Vienna is to play a meaningful role as a centre for equity trading, it will be unable to do so by focusing purely on Austrian equities.
Granted, there were a spate of new economy listings on the Vienna Exchange earlier this year when the Nasdaq Composite index was cruising towards (and through) 5000 and technology stocks could do no wrong. These included initial public offerings from companies such as update.com (via Commerzbank), Feratel Media Technologies (via RZB) and Y-Line (via Nomura and CA IB).
But what ought to have been Austria's landmark flotation, the IPO of Austria Telekom via Merrill Lynch and CA IB in November, was a victim of atrocious timing, caught as it was in a maelstrom of investor ill will towards the European telecommunications sector.