Scholarship
© Dirk Waem/belga
The Brussels stock exchange index Bel20 has crossed a symbolic line. The stock markets are on the rise again.
Shortly after the opening of stock exchange trading, the index rose to 4,038 points on Wednesday. Completing the 4,000 point mark mainly has a symbolic meaning, but it does illustrate that the Brussels stock exchange is benefiting from the renewed optimism on the stock markets.
The last time the index was above 4,000 points was in May 2022. Six months earlier, the Bel20 was even above 4,400 points. That was the highest point since the financial crisis. But the series of interest rate increases implemented by the European Central Bank (ECB) from the summer of 2022 weighed on the stock markets. Higher interest rates mean that savings and term accounts and bonds become relatively more attractive and suck money away from the stock markets.
That effect is now starting to fade as central banks prepare to end the series of rate hikes. The ECB will almost certainly implement a first interest rate cut in June, which will increase the relative advantage of equities again. Moreover, the European economy is also getting back on its feet and business results are promising. Although economic growth is relatively high in Belgium, Belgium is not the most important market for many shares in the Bel20. On Tuesday, for example, Solvay shares rose as much as 14 percent after a favorable quarterly report. On Wednesday, another 3 percent was added in the first minutes of trading.
AB InBev
On Wednesday morning it was mainly beer brewer AB InBev that lifted the Brussels index. AB InBev is the company with the heaviest weight in the index. The stock rose 4.7 percent after opening on Tuesday. Investors were satisfied with the quarterly results, which showed that turnover and volumes are developing favorably.
The Bel20 is not the only European stock market index that breaks through symbolic boundaries. The broad Stoxx 600 reached a record level on Tuesday, as did the British FTSE 100. The Dutch AEX is also at its highest level ever. That is not yet the case for the Bel20. Before the financial crisis, in May 2007, the Brussels index reached its highest level ever: 4,756 points. The collapse of Fortis and Dexia caused so much value to be lost that 17 years later, full recovery is still far away. The Bel20 still needs to rise 19 percent to surpass its all-time high.
