Digitization and support programs have boosted the AEX and other stock markets. The UK-EU deal also helped.
While Covid-19 is still plunging the world into mourning and lockdowns have brought life to a halt in many countries, the Amsterdam Stock Exchange hit a new high. The AEX index was back at pre-corona level on Tuesday. The other European stock exchanges also had a good day.
Investors are optimistic about the vaccination program in Europe, the trade agreement signed between the UK and the EU on Christmas Eve and the long-awaited corona support package in the US.
The AEX was on Tuesday at 10.30 a.m. at 633.12 points. The index hasn’t been that high since the dot-com bubble in February 2001. The index closed at 629.14 points. Around the year 2000 the AEX was still around 700 points. On March 16 of this year, the index reached a low of 389.60 points.
According to analysts, three factors have contributed to the stock market’s recovery in recent months. These are the main support programs from governments and central banks. the digitization of many aspects of life, from online shopping to video conferencing; and in line with locking and working from home, the popularity of investing with individuals. Those forced to stay home and unable to play sports games (especially in the US) began to speculate on online investment clubs like RobinHood.com.
“The monetary policy of the central banks has pushed prices up,” says stock market analyst Nico Inberg from De Aandeelhouder.nl. “You have done everything to fill the financial gaps. During the crisis they bought bonds on a large scale. Governments in Japan and Switzerland, among others, have also bought shares. “
AEX more and more technology fair
“The crisis has accelerated digitization in many industries for five years,” says the analyst. Among others, Euronext in Amsterdam and the American technology exchange Nasdaq benefited from this. “The AEX has increasingly become a technology index, much more so than the German and Belgian indexes.” Companies like the chip machine manufacturer ASML, the chip supplier ASMI, the technology investor Prosus, the online payment service Adyen and the food delivery company Just Eat Takeaway are important quotations alongside the two main representatives of the “old” economy, Shell and Unilever. At 16.23 percent, ASML has the greatest weight in the AEX. Thanks largely to the tech companies, the AEX also outperformed the broad European Stoxx 600 index. PostNL, which was permanently converted from a postal company to a parcel company, and Philips, which sold many breathing devices, also contributed to a high AEX.
The economic damage that the pandemic has inflicted on the catering trade, for example, is hardly reflected in the index. Only the wholesaler Sligro and the Heineken brewery are directly affected by the catering shutdown. Heineken still sells beer through supermarkets. The question is what will AEX do in 2021. If the central banks let their support programs run out, interest rates will rise. The technology companies in particular then have to prove that their success is permanent.