European Stocks Marked the Biggest Yearly Rally in 2012 within Last 3 Years

The performance of European stocks in last year has been the best in last 3 years. Many analysts believe that the decision of European Central Bank to start its bond purchasing program in a quest to support economies in the region has resulted such advancements. Not only that, but, investors were relieved as the tension that Euro area will fracture eased down eventually.

The benchmark Stoxx 600 Index recorded a rally of 14% in 2012, the biggest since 2009 surge of 28%. The gauge had marked its 19-month high on 20th December as it rallied to 281.81. However, since then, the index had seen gradual decrease over the concern that the US policymakers would not be able to come up with a deal to avoid the fiscal cliff.

Among the companies, the pay television operator from Germany, Sky Deutschland AG was the best performer. The operator which is half owned by the News Corp, a Rupert Murdoch enterprise almost tripled in 2012. On the other hand, the biggest bank and insurer in Belgium by market value, KBC Groep NV shares soared higher by 169%. The biggest decline was experienced by Bankia SA, of 89%. The Spanish Government took over the lender thereby provoking the banking bailout in the country.

Among all of the 19 industry groups which are listed in the Stoxx 600, auto industry companies have registered the biggest gains. The auto industry companies were led by Michelin & Cie and Continental AG; on a whole, these gained by more than 36%.

The Fund Manager of Ofi Patrimoine, Jacques Porta, rightfully stated that despite the budget talks dampened the high spirits of European stocks during the last few days of 2012, on a whole; the stocks had seen a very good year in 2012. Jacques added that in 2013, the European market will have 2 advantages: less stress on the debt crisis issue and cheap valuation.

Biggest loss, on the other hand, was experienced by the telecommunication companies. The Dutch phone company Royal KPN NV was the biggest loser in the industry, with the shares plummeting by 60%. Royal KPN NV incidentally is partially owned by Carlos Slim, the Mexican billionaire. Overall, telecommunication shares experienced a slid of 11%. Among the 18 Western European markets, ASE Index of Greece went ahead the most, by 33%.