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Wednesday, March 29, 2023

Vienna Stock Exchange falls massively: ATX loses 5.0%, banks under pressure

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Other stock exchanges in Europe also went down in early trading. The German DAX and the Euro Stoxx 50 each lost almost three percent.

Bank stocks in particular came under pressure. However, the Vienna ATX, with its heavy weighting of bank stocks, suffered more than other stock market indices. Bawag shares lost 10.9 percent. Erste Group shares lost 5.7 percent. Raiffeisen Bank International (RBI) fell by 4.6 percent. Bank stocks also suffered heavy losses on other exchanges. ING and Banco Santander slipped almost 5 percent and were the biggest losers in the Euro Stoxx 50. On the German market, Deutsche Bank lost 5.6 percent and Commerzbank even 11 percent.

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The background to the losses are the developments surrounding the troubled Silicon Valley Bank (SVB). While US regulators intervened due to turbulence in parts of the US banking sector, uncertainty remains.

Before the weekend, for example, the SVB, which specializes in start-up financing, was temporarily closed after a failed emergency capital increase and placed under state control. At the weekend, the Ministry of Finance, the central bank and the deposit insurance authority declared that deposits at the SVB and another institute would be protected.

The market strategist Jürgen Molnar from the broker Robomarkets wrote that there was little optimism on the market about securing customer deposits at the collapsed bank. The risks of high book losses in banks’ bond portfolios remain and are likely to keep the stock market busy for quite some time. For the analyst Jochen Stanzl from CMC Markets, the overnight rescue operation for the SVB even brings back bad memories of the financial crisis of 2008.

Aside from banking stocks, there were also strong price losses for some shares in Vienna. The shares of the oil field supplier Schoeller-Bleckmann lost 4.5 percent. Wienerberger and CA Immo also suffered losses of around 4 percent. Virtually all shares in the prime market fell, with only AMAG shares posting a plus of 1.4 percent.

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