Almost every European country has its own national stock index. Indices like the AEX, the BEL20 and in Luxembourg, the LuxX index, are all recognised national benchmarks in their country. Well-known among private investors, but less useful for institutional investors. In this overview we review the best-performing European share indices.
Investors who want to read the state of affairs on a stock exchange simply and quickly look at the lead indices. These come in many shapes and sizes, and from various providers. Institutional investors often use indices compiled by companies such as FTSE, MSCI and Russell.
Such international benchmarks are often preferred to the local indices, because they are often less easy to use for large investors. They are often very concentrated, because they only contain the largest and most traded shares of a stock exchange or simply because the market is very small. Apart from the fact that relatively few shares are included in such an index, it is often the case that the index is dominated by one or a few companies.
Home bias
Objections of this kind often play a less important role for private investors, who are moreover generally less familiar with institutional indices. They are also traditionally more focused on their own local stock market. Although this home bias has definitely diminished in recent years, many will still glance at the local stock exchange index to find out what the state of the financial markets is. In the Netherlands, the AEX is therefore all too familiar.
The Amsterdam stock market index is also subject to the usual disadvantages of a local index. For instance, the index consists of only 25 shares and at the end of February, the three largest companies were Unilever, Shell and ASML, together accounting for a weighting of 41 percent.
41 local markets in Europe
Europe has a total of 51 countries, of which no less than 41 have their own local stock market index. And that does not only include the larger countries such as Germany, France and the United Kingdom. Also countries like Bosnia and Herzegovina, Moldavia and North Macedonia. Only dwarf states, such as Liechtenstein and Andorra, and less developed countries, including Azerbaijan and Kosovo, lack their own national stock market index.
In this week’s top five we provide two overviews. The first is the best-performing stock market indices over the past 12 months through February 2022. The second overview takes a look at a slightly longer period, namely three years.
LuxX leads, thanks to Aperam and ArcelorMittal
For the 12 months leading up to February 2022, the Luxembourg stock exchange is in the lead. The LuxX stands at a plus of 4.25 percent. The index is made up of just 10 names, five of which are leading the pack. These are Reinetinvest, SES, RTL Group, ArcelorMittal and Aperam. Together they account for over 92 percent of the index. Of these five, it was mainly the steel companies Aperam (36 percent) and ArcelorMittal (44 percent) that stood out.
Scandinavia and Baltic lead three-year table
In the top 5 over the past three years, Scandinavian and Baltic countries are the most important, in addition to Switzerland. The best return was enjoyed by Iceland with an average annual return of almost 24 percent. Today, the index stands at around 400, but in the past it was much higher. In mid-2001, the index stood at around 1,000 and then began an increasingly rapid rise led by the banking sector, of which Landsbanki is now the most well-known and infamous. A top of around 9,000 points was reached in mid-2007, but then the shaky financial edifice collapsed and the index fell to around 250 points in just over a year.
