TURNOVER REACHES RECORD LEVELS
Total turnover for the year amounted to 1965.8 billion guilders, 44 percent higher than the 1361.3 billion guilders of 1995. Share turnover in 1996 jumped to 645.9billionguilders from a year-earlier 400.6 billion guilders, while bond turnover mushroomed to 1319.8 billion guilders from 962.1 billion guilders in 1995.The steady increase in turnover can partly be attributed to increasing professional activity, rising share and bond prices and the downtrend in interest rates. The record for monthly share turnover was booked in November, when turnover amounted to 42.0billion guilders. The record for daily share turnover was recorded on December 6 at 5.87 billion guilders. This roundly beat the previous record of October 18, which stood at a mere 4.82 billion guilders. The number of transactions jumped to no less than 42,254 , or nearly 7,000 (20 percent) higher than the previous record of 35,450 booked on November 26. The mushrooming turnover levels reflected the massive wave of selling which followed remarks by U.S. Federal Reserve chairman Alan Greenspan that perhaps a halt should be called to the rise and rise of world financial markets. The Amsterdam EOE index opened at 615.78 points on December 6, well down from its previous close of 628.44. Through the day it fluctuated between a high of 617.57and a low of 589.73 points, later staging a hesitant recovery to close the day at 616.26points.
INDEX RECORDS
A string of records were set again in 1996. The AEX index battered through the 500 points barrier fairly early, and the year s high of 636.75 points was set on December3. The index dipped to its lowest point of the year on February 19, sinking to 474.97points. All in all the index has risen by 33 percent since end-1995. In 1995 the index rose 17 percent year on year. In terms of turnover 1996 was also one of the best investor years ever. The index was at its most volatile in December, falling by as much as 40points on December 6. The main factor driving the stock market s record-breaking run was the downward trend in interest rates. In addition the strong increase insecurities trading also played a role as large institutional investors such as pension funds stepped into the market after being given the go-ahead to increase their share holdings. However in view of the strong increase in the number of transactions, it also appears that an increasing number of private investors are finding their way to the stock exchange.
TRENDS ON THE AMSTERDAM EOE INDEX
The Amsterdam EOE Index, up 33 percent year-on-year at end-1996, comprises the following stocks: ABN AMRO (54 pct), Aegon (+55 pct), Ahold (+65 pct), AkzoNobel (27 pct), BolsWessanen (- 8 pct), CSM depositary receipts (+37 pct), DSM(+29 pct), Elsevier (+36 pct), Fortis Amev (+41 pct), Gist-Brocades (+13 pct),Hagemeyer (+65 pct), Heineken (+7 pct), Hoogovens (+34 pct), ING Group (+45pct),KNP BT (+-8 pct), KLM (-14 pct), KPN (+13 pct), Koninklijke Olie (+35 pct),Nedlloyd (30 pct), Nutricia (+102 pct), Philips Electronics (+21 pct),PolyGram (+3pct), Unilever (+36 pct), VNU Verenigd Bezit (+64 pct), Wolters Kluwer (+51pct).
A GOOD YEAR FOR BOURSE NEWCOMERS
Another six companies were admitted to listing on the Amsterdam Exchanges NV in1996: packaging giant Van Leer, Toolex Alpha, Endemol, Beter Bed, AND International Publishers and ASM International. The majority have had a successful first year. Their share price performance is shown below:
Introduction price end-1996 percentage change AND Dfl. 3.30 Dfl. 5.10 +54.5 Endemol Dfl. 48.00 Dfl. 57.57 +19.8 Van Leer Dfl. 32.00 Dfl. 34.60 + 8.1 Beter Bed Dfl. 28.00 Dfl. 28.40 + 1.4 ASMI Dfl. 18.00 Dfl. 17.40 - 3.3 Toolex Alpha Dfl. 43.00 Dfl. 18.00 -58.1 Introductions and issues in 1996
The volume of issues (= total of new paper admitted to listing) on the share market in1996 amounted to 32.0 billion guilders, a marked increase on the 23.6billion guilders of 1995.As a result of the surge in share prices, the total market capitalisation of domestic share issues jumped to some 789 billion guilders at end-1996, from 571 billion guilders a year earlier. In 1996 29 new issuing institutions were introduced, compared with 30 in 1995. Just as in previous years, investment funds accounted for a considerable portion (21) of the share market introductions. The volume of new bond issues fell to 89.1 billion guilders from a year-earlier 91.4billion. Government bonds accounted for 26.0 billion guilders of the total, compared with 51.4 billion guilders in 1995. Domestic borrowers accounted for 38.5billionguilders of the total, up from the 20.5 billion guilders of 1995. The issue of mortgage-,bank- and savings certificates fell to 6.7 billion guilders from a year-earlier 7.8 billion.
AMSTERDAM AGAIN AN INTERNATIONAL OUTPERFORMER
The Amsterdam Exchanges NV outperformed the Morgan Stanley global average in1996. The MSCI world reinvestment index rose by 23 percent in 1996, while the CBS reinvestment index rose 37 percent over the same period. Amsterdam s bourse barometer, the AEX, also found itself in the international forefront with a gain of just over 33 percent, a performance only bettered by Madrid(up 41.7 percent), Stockholm (up 38.9 percent) and Hong Kong (up 33.8 percent).Other strong performers included Frankfurt s DAX index (up 28 percent) New York's Dow Jones (up 28 percent) and Paris CAC (up 23.9 percent).
THE YEAR IN BRIEF
January
The stock market more than lived up to expectations in January, as the Amsterdam EOE index battered through the psychological 500-points barrier within days on record turnover levels averaging a hefty 8.3 billion guilders a day. Share prices rose steadily over the first half of the month, thanks to the same factors which had fed the positive stock market climate in 1995: falling interest rates and a solid dollar. In the second half of January the index hovered range-bound at between 500 and 510points,before finally closing the month at 503.38 points (end-1995: 486,35points). The future of ailing Dutch plane maker Fokker dominated the market headlines.
February
In February market sentiment was dominated by trends in interest rates, leading the AEX index to fluctuate strongly and even to dip briefly below the500-points mark. In addition trade was driven by corporate earnings figures. Despite a slight rise in interest rates and the resultant dip in bond prices, the Amsterdam EOE index ended the month at a new record high of 513.22 points (up from 503.38 points at end-January). For the most part these gains were booked in the last week of the month. While initial corporate earnings figures had been judged disappointing, towards the end of the month a number of companies posted attractive profits.
March and first quarter
Both in terms of turnover and price trends this was an excellent first quarter for the Amsterdam Exchanges NV, with a string of new records booked in both areas. Total turnover for the quarter rose to 520.4 billion guilders from 334.4 billion guilders a year earlier, mainly due to the explosive growth in share turnover. The AEX and AMX, the two share market indices carried jointly by the stock exchange and the EOE Options Exchange, also both scaled new all-time highs at the end of the quarter. Sinceend-1995 the AEX has risen by j9.6 percent to 531.65, while the AMX has risen by no less than 26 percent to 726.01 points. Factors contributing to the favourable investor climate included positive economic growth, continued low interest rates, rising share prices on Wall Street and the good earnings performance shown by most companies. In addition the fact that institutional investors are increasing investing a greater proportion of their capital helped fuel the boom sentiment.
In March the Amsterdam EOE-index again jumped to a new record high: 531.65points, an increase of four percent from end-February and 9.6 percent up onend-1995.At the end of the month the market was given an extra fillip by the Dutch central bank s decision to lower its rate on advances (secured loans rate). The rate was cut by0.25 percentage points to 2.5 percent its lowest level in over 60 years. The yield on the latest 10-year government bond issue nudged up a touch to 6.45 from 6.39.Foreign bourses were dominated by the BSE crisis (negatively Britain) or election results (positively Germany). Wall Street s sustained upward climb appeared to stabilise in March, but nevertheless the Dow Jones index was able to nudge up to anew high of 5,683.60 on March 18. But for no apparent reason the index fell through its 5,600 point support at the end of the month, closing at 5587.14.
April
The record-breaking run again dominated trade on the Amsterdam Exchanges NV in April. Halfway through the month the AEX index broke through the magical 550-points barrier. However, turnover levels were unable to sustain their March highs. Important factors influencing the upbeat market sentiment in April were the falling trend in interest rates and a markedly stronger dollar. The dollar hardened to more than 1.70 guilders. On April 18 the Dutch central bank De Nederlandsche Bank announced a 0.10 percentage point cut in the rate on special advances, following a rate trimming by Germany s Bundesbank. More importantly however, the Dutch central bank also cut its secured loans rate by half a percentage point to a historically low level of two percent. The resultant surge in bond prices and the concomitant fall in bond yields created a highly favourable climate for further share price rises. The effective yield on the latest 10-year government bond issue fell 0.2percentage points to 6.26 percent in April.
May
The upbeat sentiment which characterised the first few months of 1996 on the Amsterdam Exchanges NV continued into May. Turnover levels remained extremely high and the AEX ended the month at a new record high. Important underlying factors contributing to the favourable market climate include the generally favourable performance of the Dutch corporate sector, positive reports on economic prospects, a lightly firming dollar and a continued fall in interest rates. The AEX index racked up a series of new records early in the month, which were subsequently followed by a mild correction. But the march ahead was resumed towards the end of the month, partly due to a number of new records set by the Dow Jones index in the United States. The AEX index closed the month at a new all-time high of 570.09, a rise of 2.8 percent compared with end-April.
June
In June the bourse was as changeable as the weather. The up trend of the first five months of the year was not continued, despite a number of new index records early in the month. After that prices stagnated, as dollar support fell away (having incidentally risen six percent in the first half), long term interest rates firmed and a further round of official rate cuts failed to materialise. The Amsterdam EOE index closed the month at560.33, compared with 570.09 at end-May (a fall of -/-1.7 pct).
July
The summer month of July on the Amsterdam Exchanges NV was characterised by a high degree of volatility as June had been. There were a number of hefty share price fluctuations, while the overall trend in prices was down. In the end the damage remained limited thanks to a final spurt in the last few days of the month. The Amsterdam-EOE index closed the month at 535.73 , compared with 560.33 at the end of June.
August
August saw a continuation of the late July recovery from the sharp share prices falls of the summer. Favourable U.S. figures and a string of good half-year earnings figures from Dutch companies, coupled with a resumption of the downtrend in interest rates, helped the Amsterdam market to prolong the recovery. The Amsterdam EOE-Index(AEX) climbed almost three percent from 535.73 at end July to 550.99 at end-August. The Amsterdam MidCap index of medium-capitalised firms surged even more strongly, jumping five percent to 839.05 points.
September
After a somewhat sluggish start the bourse steamed to record closing highs in the final two trading days of September, topping the earlier record set on June 6this year. The final day s trading in particular gave a substantial boost to the AEX of5.04 points, propelling the index to an all-time closing high of 576.96 on the last day of the month. The market s initial hesitancy can be attributed in part to the so-called October syndrome , as many investors are unable to forget that this was the month both of the crash of 1987 and the mini-crash of 1989. But the chief reason motivating investor hesitancy was the continuing fears of rate hikes as became obvious from the way the whole financial world held its breath in anticipation of a possible interest rate move by the U.S. Federal Reserve, the U.S. central banking system, on September 24.
October
October on the Amsterdam Exchanges NV was very much a game of two halves. The first weeks saw a continuation of September s record-breaking run, but in the second half a correction followed. On balance, the average share price level at end-October was little changed from that at end-September, although there were major differences between the individual stocks, due in part to interim earnings reports. Share turnover reached a new record.
November
November 1996 will likely go down in history as one of the best-ever months for the stock markets. World share prices rose over a broad front, setting a string of new records. There was frequent reason to crack open the champagne. Turnover levels were also high. The AEX index rose from 577.02 points at end-October to631.06, arise of 9.4 percent.
December
In December investors were initially badly spooked by U.S. Fed chairman Alan Greenspan's remarks about excessive share market gains. The AEX index even plunged to below 500 points, but eventually ended the year at a new record of 648.2points.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For more information please contact:
Alex van Drooge
Director of Marketing and Communications
Amsterdam Exchanges NV
Tel: +31 20 555 4014
Paddy Manning
St James Corporate Communications
Tel: +171 436 4101