EU stock prices up 118% over the past five years

New research from Halifax Financial Services, analysing stock price indices across the 27 members of the European Union over the last five years, shows that stock prices across the EU have increased by an average of 118% since 2003. Bulgaria, at 352%, recorded the strongest rate of growth in stock prices over the past five years; more than three times the EU average and 6 times greater than the growth of UK stock prices (55%).

The top performing stock markets are primarily the newest EU member countries ...
Boosted by greater integration within the EU, eight of the ten countries with the strongest share price gains since 2003 are among the youngest members of the EU, joining no earlier than 2004. For example, over the past five years Bulgaria and Romania - who gained membership to the EU in 2007 - recorded the first and third highest share price gains respectively.

...and are located in Eastern Europe.
Of the ten EU countries with the fastest rate of growth in stock prices since 2003, eight are in Eastern Europe. Lithuania, at 309%, recorded the second highest rate of growth, followed by Romania (299%). Luxembourg recorded the fastest rate of growth among EU countries based outside Eastern Europe (263%).

EU share prices grow by twice the rate of US share prices
Since 2003 the average growth in EU share prices compares favourably with other major global financial markets. In the US, the Dow Jones Industrial Average rose by 51%, under half the growth rate recorded among EU stock market indices (118%). The EU also outperformed the Australian All Ordinaries Index (90%) and the Japanese Nikkei 225 index (77%). However, the Hang Seng share index in Hong Kong (195%) experienced stronger gains.

Slovakia and Luxembourg record the only increases in stock prices over the past year
Over the past year share prices have fallen by an average of 16% across EU member countries. Slovakia (13%) and Luxembourg (5%) were the only countries to experience a rise in stock prices, while Slovenia (-3%) delivered the smallest decline in share prices. At the other end of the scale, Estonia (-34%) recorded the sharpest decline in stock prices since April 2007, followed by Cyprus (-26%) and Ireland (-25%). UK stock prices have fallen by 6% over the same period.

Financial market difficulties continue to hurt stock market performance in 2008
With the aftershocks of the US subprime crisis still being felt in the financial markets, share prices in EU countries fell by an average of 14% through the first four months of the year. The largest fall was in Bulgaria (-36%), followed by Cyprus (-32%) and Romania (-29%) while UK stock prices fell by 6%. Luxembourg was the only EU country to see a rise in share prices, increasing by 2% since the start of the year.

Martin Ellis, Halifax Financial Services chief economist said: "Despite the recent financial market difficulties, the long term performance of stock markets across the EU has been strong. Over the past five years shares prices have risen by an average of 17% per annum.

The top performing stock markets over the past five years are primarily the newest members to the European Union. These countries have clearly benefited from greater capital flows, especially foreign direct investment and the further integration of their financial markets within the EU. This has boosted share prices substantially."

Customers keen to invest in the European stock markets can speak to a qualified personal financial adviser in any Halifax or Bank of Scotland branch. The Halifax European fund is available through the following products: ISA Investor, Stakeholder Pension and the Personal Investment Plan. Investments can go down as well as up.