For most companies quoted in Amsterdam, 1994 was a year of consolidation after the explosion in prices in 1993, although initially it did not appear that way. In the first quarter, market sentiment was particularly firm - with enormous turnovers. Then support fell away and the picture became highly volatile. Average prices hardly advanced over the year as a whole. This was basically attributable to the strong rise in the rate of growth of the American economy, and the consequent hikes in US interest rates because of fears of inflation. On top of this the European economies were also growing, giving rise to further worries on the interest rate front. However, such worries did not frighten off the private investor at all - in fact, quite the contrary. In view of the large number of small transactions, it is more than likely that the activities of this group once again increased. Having stood at +414.27 at the end of 1993, the Amsterdam EOE Index rose to 414.47. When it comes to turnover, the Amsterdam Exchanges NV set a new record. Turnover in shares was NLG 311.2 billion (1993: NLG 249.6 billion). Combined turnover amounted to NLG 1,159.1 billion (1993: NLG 1,018.9 billion).
Trading System Amsterdam
Although three months is perhaps too short a period to draw any firm conclusions, it is broadly safe to say that the Trading System Amsterdam got off to a good start on 30 September. In the first few weeks it may have taken a bit of getting used to, but the snags soon ironed out and Stock Exchange Members were generally able to achieve better prices and spreads on the Top 30 shares than the competition in SEAQ International.
Great Year for Issues
In contrast to the investment climate, the new issues climate for shares was especially fruitful: new shares in excess of NLG 60 billion were admitted to listing, so that Amsterdam very definitely maintained the upward trend of recent years. In 1992, the volume of new share issues was NLG 15.4 billion, and the following year it was up to NLG 26.2 billion. The NLG 60 billion this year obviously includes the mega-flotation of Koninklijke PTT Nederland (KPN) on 13 June. Since the privatisation of the former state enterprise, the share price has advanced strongly. KPN shares closed the year at NLG 58.50 (+16.0%).
Admissions to Listing
Of all the new companies admitted to listing in Amsterdam during the year, the KPN flotation on 13 June takes the crown. The first tranche raised NLG 23 billion. Other admissions included Ballast Nedam, returning to the market after regaining independence: and Borsumji Wehry floated its subsidiary Ceteco. Smit Transformers was another newcomer, on 17 October, and the last major company to go public in 1994 was EVC on 21 November. At a figure of NLG 1.13 billion, the latter company was the second biggest flotation of the year.
Large Volume of Issues
The issue volume (= total volume of new paper admitted to listing) on the share market in 1994 was NLG 60.0 billion, a significant advance on the NLG 26.2 billion in 1993. 1994 saw the admission of 21 new institutions (1993 - 14). As in previous years, the investment companies accounted for a considerable proportion of the share issues(16). The issue volume on the bond market was down from NLG 70.1 billion to NLG 62.8 billion, of which NLG 36.1 billion (1993: NLG 45.2 billion) related to government bonds. The volume of Eurocurrency loans fell from NLG 24.1 billion to NLG 23.9 billion, of which NLG 15.6 billion (1993: NLG 16.9) billion was raised by domestic borrowers. Issues of mortgage bonds, bank bonds and savings bonds which are not included in the above figures, rose from NLG 3.4 billion to NLG 3.6 billion. The number of shares quoted on the Amsterdam Exchanges NV rose from 660 to 667 while the number of bonds fell from 904 to 903. Rising share prices lifted the aggregate market capitalisation of local companies to around NLG 491 billion as at year-end 1994 compared with NLG 449 billion the previous year, with KPN accounting for NLG 27 billion of the NLG 42 billion increase.
Good Year for the 'Locals'
If 1993 was the golden year, particularly as far as the more active stocks were concerned, then 1994 was a first-rate year for locally traded companies (or for some of them at least). This was put down to either pent-up demand, lower susceptibility of the companies concerned to the vagaries of the dollar or a combination of the two. The star performers (and the stragglers) were as follows. As in 1993, Van Giessen-De Noord was among the big winners over the past twelve months (up 116%). Among the really high climbers (100 plus) were also the relatively small companies LCI Computer(+136%), Neways Electronics (+124%) and the Rood Testhouse (108%), the latter company returning to official listing last year. One surprise was the favourable showing of Amsterdam Option Traders, the listed company active on the Amsterdam Exchanges NV itself, which saw business expand spectacularly following the implementation of TSA. The share price also moved ahead sharply (+80%). many local companies were also among the losers, though. Most prominent among them was the Begemann group (-47.80%), which faced numerous difficulties, including the attempt by Begemann to take over Deutsche Waggonbau. The downturn of the financial sector was considerable, too. The CBS Financials Index fell by around 8%, chiefly as a result of rising interest rates.
More Active Stocks Also Winners
There was only one star performer among the twenty more actively traded companies, and this was Hoogovens. The steel group added around 60% in value, mainly on the back of interest from the UK and North American investors. Other big winners were DSM (29%), Philips Electronics (+28%), Heineken (+21.5%), Ahold (+14.5%) and Oce-Van der Grinten (+14%). It was generally not a year in which whole sectors did particularly well or badly. The watchword was 'stock-picking' - careful evaluation of individual companies.
International
The following table shows the percentage change in share indices during the past twelve months. Amongst the most important European exchanges the Amsterdam Exchanges NV performed best with a marginally rising Amsterdam EOE-index.
End 93 End 94 % change relative to year-end 1993 AmsterdamAEX 414.27 414.47 +0.10 New YorkDJI 3574.09 3834.44 +2.10 LondonFTSE100 3428.60 3056.60 -10.90 FrankfurtDAX30 2267.98 2077.03 -8.44 ParisCAC40 2290.56 1894.15 -17.30
The Stock Exchange Month by Month
January
The Amsterdam Exchanges NV continued the upsurge of 1993 in January sweeping aside the previous year's turnover and index records in the rush. The Amsterdam EOE Index - the combined index of the Stock Exchange and the Options Exchange since 1 January - broke various records and closed the month at an all-time high of 438.71 compared with 414.27 at the end of December - a rise of almost 6%.
February
Developments on the interest rate front produced a price correction in February. After the explosion of share prices and turnovers in January, the tide turned and the Amsterdam EOE Index fell back by 4.1% from 438.71 to 420.75. The CBS All-Share Index was also forced to shed a few points, down form 294.80 to 283.70 (-3.8%).
March
With a combined turnover of NLG 134.5 billion, the Amsterdam Exchanges NV achieved new record turnovers in March. In the first three months, the Stock Exchange had already turned over NLG 356.1 billion compared with NLG 248.2 billion in the corresponding period in 1993 - an increase of over 43%. The record performance this month was chiefly due to the enormous turnovers in Dutch government bonds. Prices were under pressure during the month. The Amsterdam EOE Index fell 4% to 403.85 while the bond index lost 1% to 116.00. The new issues market continued to be buoyant.
April
After the brief setback, share prices on the Amsterdam Exchanges NV hesitantly resumed their upward trend in April. The Amsterdam EOE Index climbed more than 9 points to 413.06 (+2%). The increase was mainly attributable to the Internationals, a sector in which the good first-quarter results of AKZO Nobel were particularly well received. The Internationals Index rose 8%. Financial Institutions fell back slightly however (losing more than 2% according to the CBS Financials Index). bond yields showed a slight improvement from 6.25% to 6.49% (+4%). The volume of the new share issues was NLG 828 million.
May
Once again, the interest rate concerns had a major impact on share prices on the Amsterdam Exchanges NV. Minds were also preoccupied with the forthcoming KPN flotation. In anticipation of this, the volume of new share issues during the first five months of 1994 exhibited a gratifying increase: NLG 23.4 billion compared with NLG 9.1 billion for the corresponding period in 1993. Bond yields again moved ahead slightly from 6.49% to 6.82% and the Amsterdam EOE Index fell back below the level at the beginning of the year (400.77). The only local share index to advance at all was the Official Parallel Market Index, which in fact rose strongly.
June: falling prices, a weaker dollar and the KNP flotation
June was the month of the long-awaited and much publicised flotation of Koninklijke PTT Nederland. At the offer price of NLG 49.75, there was considerable interest on the part of institutional investors but demand from the general public was disappointing. The first quotation for the share was NLG 50.50, and the price went on to add several tens of guilder cents. Then even the newest addition to the Amsterdam Exchanges NV fell victim to a deterioration in the stock market climate and reached its low point of NLG 47.60 (21 June). Private investors played a part in this by cashing in their NLG 2.50 discount. Nevertheless, there was a general satisfaction with the biggest-ever flotation in the history of the Amsterdam Exchanges NV; the government chalked up not nearly NLG 7 billion from the sale of shares and dealers did very nicely out of the huge turnovers in KPN stock, especially in the first few days of trading.
June
On the first day alone, there was a mega-turnover of 35 million shares. Never before had so many shares of one company changed hands in a single day. The disappointing stock market climate in June was mainly due to worries on the interest rate and exchange rate front. While short interest rates continued to fall, rates at the long end of the market were fluctuating wildly, reaching a high for the year (NLG 7.25%) in the course of the month. Although the bond market recovered somewhat towards the end of the month, the sharp fall in the value of the dollar prevented the share market from making a powerful advance. However, the price of KPN bounced back conspicuously to more than NLG 50. On average, share prices in Amsterdam fell almost 5%, which was on par with other continental bourses.
July
In July, the Amsterdam EOE Index rose above the 400 barrier for the first time since 15 June (400.78 on the basis of closing prices). Against a background of less hectic interest rate developments and favourable economic forecasts, many shares managed to recover to respectable levels. The cyclical stocks led the way, with DSM and AZKO standing out from the crowd. Share prices in fact seemed to be anticipating the half-year figures due out in August. On moderate turnovers, but normal for the time of year, the Amsterdam EOE Index achieved a value of 408.21. With a rise of 6.4% the Amsterdam Exchanges NV outperformed the rest.
August
There were two faces to the Amsterdam Exchanges NV this month: initially market sentiment was predominantly rather dull, with a tendency for prices to erode. Towards the middle of the month, however, the market picked up, influenced by various factors. The Amsterdam EOE Index finished the month at 419.44 compared with 408.21 at the end of July (+3.51%).
September
The Stock Exchange reforms in Amsterdam started out well. On the first day of trading, 30 September, the new trading system performed satisfactorily. Everything was in order technically, the dealers went to work with a will and the order routing functioned perfectly as the day progressed. In 'quiet' trading, a turnover of NLG 3 billion, of which NLG 1.2 billion was shares, was recorded. The month of September was marked by a dull sentiment, with falling prices across the board setting the tone. At the end of the month, when it became obvious that the American banks were going to leave interest rates alone, the market rallied briefly. The Amsterdam EOE Index fell back on the month from 419.44 to 402.27 (-4%).
October
There was little sign of the proverbial 'October Crash' phobia in trading on the Amsterdam Exchanges NV this month. Share turnover was substantially higher than in September. A cumulative share turnover total of NLG 262.6 billion even broke the 1993 record (NLG 249.6 billion). With the quarterly figures in prospect, interest rates fairly stable and a stronger dollar, the Amsterdam EOE Index was able to move ahead sharply (30/9: 402.27) - up 2.5%. the mood of the market gradually swung from dull to buoyant by the end of the month. The Amsterdam Exchanges NV was also able to welcome a new company to listing. The flotation of Smit Transformatoren N.V was well received. Long interest rates fell marginally from 7.5% to 7.43%.
November
With a combined turnover of NLG 1,033.3 billion, the Amsterdam Stock exchange achieved its highest-ever annual turnover a whole month before the end of the year. It was only in 1993 that the thousand-billion-guilder barrier was broken for the first time, with a turnover of NLG 1,018.9 billion. The new record turnover this year was nevertheless reached in a month when investors were adopting a wait and see attitude. Despite the predominantly good quarterly results, a drifting market was unable to sustain the firm sentiment of October. The reasons for this were fears of higher interest rates and, as a consequence of that, a fall in the Dow Jones Index. The Amsterdam EOE Index slipped slightly to 409.4 (-0.8%).
December
In the closing month of the year, the Amsterdam Exchanges NV was generally buoyant. The Amsterdam EOE Index rose from 409.40 to 414.47. But whether the slight upward trend can be maintained is far from clear.
For further information, contact:Joost Maas, Tel. +31 205234567 or Paddy Manning, Tel: + 44 (0)171 4364101.
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