Shares on the Prague Stock Exchange will thus beat other major world markets, including overseas ones, in terms of yields. By comparison, the US stock index S&P 500, which includes the shares of the 500 largest companies listed on the US stock exchange, is gaining significantly less this year, over 15 percent.
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However, in the long run, overseas stocks are definitely doing better. Over the last ten years, the US index has grown by more than 240 percent, while the Prague Stock Exchange index has appreciated “only” by 52 percent in the same period.
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The main driver of the bank and ČEZ
According to Štěpán Křeček from BH Securities, the PX index is pulled upwards mainly by banks, which, together with the energy giant ČEZ, have the greatest weight in the index.
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“Rising shares of banks have a significant share in this year’s development of the index,” said Křeček. “Given that we expect further tightening of monetary policy by the Czech National Bank, the PX index could end this year even higher,” he added.
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The Prague Stock Exchange has undergone significant fluctuations since the beginning of last year. Even during the first two months of 2020, the PX index was above 1,100 points. However, the first cases of a coronavirus pandemic in the Czech Republic and the related lockdown sent Czech shares significantly lower – below 700 points. In the summer, the Prague Stock Exchange index strengthened significantly again, with the second wave of the pandemic coming with another significant correction.
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At the beginning of this year, we saw growth again, but at the same time the number of people newly infected with coronavirus also grew. The Prague Stock Exchange therefore continued to fluctuate. A major turning point came at the end of September this year, when the PX index rose to its highest level in 13 years, driven mainly by the banking sector, whose shares reached historic highs.
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According to broker Vladimír Vávra from Wood & Company, this year’s growth was influenced by positive global sentiment on the financial markets.
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“The PX Index has been pulling up CEZ, which is benefiting from rising electricity prices and also from positively tuned recommendations from local brokers,” said Vávra, who does not expect the Prague Stock Exchange index to make another significant upward jump by the end of this year. sentiment. The Czech National Bank (CNB), which is about to raise interest rates further, should also record this. “In addition, shares on the Prague Stock Exchange can support a solid dividend yield,” he added.
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Until the end of this year, it will therefore probably depend most on whether the positive mood on world markets persists and how the CNB approaches the current high inflation. It can be expected that a further increase in interest rates will come by the end of the year, from which banks, which have a significant share in the weights of the index, should benefit in particular.
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