AEX index back to its former level above 600 point limit

AEX index back to its former level above 600 point limit

22 December 2020Reading time: 3 minutes

It has been a turbulent 2020 on the stock markets worldwide. At the end of June, we already wrote about the developments of the AEX index in the first half-year of 2020, which included the impact of the oil conflict. As a result especially the stock price of Royal Dutch Shell was considerably lower and the AEX got pulled down with it, bringing the index to the lowest level of 404 points on 18 March. The subsequent outbreak of the coronavirus brought a time of uncertainty for both listed companies and investors. The corona crisis resulted in clear winners and losers among the main funds of the AEX.

Winners and losers

Funds such as Unilever and Ahold Delhaize benefited particularly at the start of the corona measures from the hoarding behaviour of consumers. The number of digital transactions and payments also increased significantly, which was beneficial for a heavyweight like Adyen. A significant portion of these transactions were intended for companies such as Just Eat Takeway, as consumers chose to have food delivered to their home due to the lack of catering options. In the end, little changed for ASML and it remained business as usual for the chip machine manufacturer.

As mentioned earlier, Royal Dutch Shell is one of the big losers this year, which is mainly the result of the oil conflict earlier this year. The stock price has not yet been able to recover since then. Due to the massive closure of the catering industry and due to a lack of festivals, beer brewer Heineken has also suffered a lot. Although the stock price has been able to recover somewhat, the former level of the beginning of this year is still a long way off. Randstad saw the number of jobs in especially the hospitality and travel industry decline. In addition, many other companies had temporary vacancy stops due to the economic uncertainty. Nevertheless, Randstad's stock price is now showing a cautious recovery.

Expectations 2021

The fact that the AEX was able to recover towards the end of the year to its former level of January 2020 is mainly due to heavyweights such as Adyen, Unilever and ASML, who survived the year unscathed or even managed to take advantage of the current crisis. The hardest blows were mainly felt in the travel and aviation sector, but there are no large funds from that sector within the AEX.

Another potentially favourable development is the increased popularity of investing as an alternative to the negative savings rates. In the past year about 17% more Dutch households have entered the investment market, according to a research by Kantar. Most of these newcomers mainly choose to invest in Dutch equities. The same research shows that another 12% of all Dutch households intend to start investing next year.

The consequences of the corona crisis will be felt well into 2021, as the massive vaccination of the world's population will also take a long time. Banks in particular also fear the consequences if governments reduce their financial support to businesses. This could lead to payment problems related to mortgages and loans. ING and ABN Amro are listed within the AEX. It therefore remains to be seen whether the AEX can also remain above 600 points next year.

The future price of the stocks is subject to several political, industrial and sector specific as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.

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27/11/2022 16:16:43