Vienna Stock Exchange 1980s: Revival & Growth

In the current episode “Excerpt from the fanboy book on the Vienna Stock Exchange: The 80’s (abridged)”, Christian Drastil gives a very personal insight into the genesis of his passion for the stock market – embedded in an autobiographical book project that spans exactly 15,000 days.

What begins as a coming-of-age story of a Viennese from a working-class family turns out to be a contemporary document about the awakening of the Austrian capital market. Between Easter ski courses, army anecdotes and the first warrant speculations, Christian Drastil draws a picture of the Vienna Stock Exchange in the 1980s that shows: One of the largest stock rallies in the history of the Vienna Stock Exchange took place while a whole generation of young Austrians were unaware of it – because financial education simply did not exist in schools.

1985: Jim Rogers discovers Vienna – and Vienna discovers the stock exchange

The year 1985 marked the actual big bang of the modern Vienna Stock Exchange. It all started with an article in the US financial magazine Barron’s, in which the legendary investor Jim Rogers made strikingly positive comments about an “underdeveloped but extremely interesting emerging market”. He meant Vienna. The most informative stock index at the time, the WBI, was trading at 125 points in February – after starting at 100 points 16.5 years earlier, in 1968. A development that can confidently be described as a sleeping beauty.

What followed was nothing less than the Vienna Stock Exchange’s first rally of the century. The index was already at more than 155 points in March and had reached 250 points by July. Contemporary witness Erich Pitak remembers that this increase was almost exclusively due to foreign investors – a typical scenario for an emerging market. But in the fall the picture changed: suddenly it was domestic investors who were pulling the market further up. A key reason was the prospect of tax incentives for new stocks. The year ended at 275 points – an increase of 130 percent. This made Vienna the world’s best stock market in 1985. The best individual stock, Karl Kahane‘s Montana, even gained more than 900 percent thanks to Jim Rogers’ impulse.

At the same time, new companies, Jungbunzlauer and Lenzing, went public. A wave of IPOs that would only really gain momentum in the following years.

Drastil himself, then 17 years old and a student in Vienna-Donaustadt, noticed nothing of this. No word about stocks at school, no internet to spread the word. Instead: a half-year report card with seven not enough, Easter ski courses and garden house parties on the Old Danube

The stock exchange courier, a pioneer and the courage to be an entrepreneur

The Börsen-Kurier, Austria’s traditional financial medium, played a central role in Drastil’s path to the stock exchange. The story of his change of ownership, told by Florian Laszlo in the Börse People podcast, is a lesson in entrepreneurial courage and the luck of the hardworking.

Dr. Herbert Laszlo, a studied lawyer and financial journalist, had already been editor-in-chief of Börsen-Kurier in the 1960s, but had to resign from the position after a dispute over the editorial line. Almost 20 years later, in 1985, the offer to buy the medium came. Florian Laszlo describes his father’s question of conscience as follows: “Every editor-in-chief who has been fired wishes that one day the owner would come and say, we’re really sorry, wouldn’t you like to take over again and take over the medium? My father was always very proud of the moral victory.”

Herbert Laszlo decided to buy it – “instead of the Ferrari, he bought the medium” – and expanded the stock market courier into what it is today. The fact that he benefited from perfect timing, namely the awakening of the Vienna Stock Exchange by Jim Rogers and the subsequent rally, does not detract from his entrepreneurial performance. It was, as Drastil puts it, the luck of the hardworking, coupled with consistently good work and an editorial line that was maintained even in disregard of advertising interests.

For the young bank employee Drastil, the Börsen-Kurier, along with the top prize, became mandatory reading. In a time without the Internet, print journalism was the only access to stock market information.

1986 and 1987: Graduation, joining the bank and Black Monday

The year 1986 was Drastil’s personal “Year of Change”. He only passed his Matura on his second attempt in the fall, which meant that his entry into what was then Erste Bank und Sparcasse was subject to the condition of retaking the exam. He passed the entrance test with flying colors – calculation examples, brain teasers, puzzles. Skills that his mother passed on to him from an early age and that he still considers to be a crucial skill in the stock market business.

Drastil devotes a remarkable digression to mental arithmetic that illustrates his mathematical thinking. While many calculate 17 to the power of 3 in the classic way – 17 times 17 by decomposing it into 170 plus 119, then times 17 – he prefers the approach using round numbers: 20 times 17 minus 3 times 17, i.e. 340 minus 51 equals 289, then 20 times 289 minus 3 times 289. The result is the same – 4,913 – but the way over Round numbers are faster and safer for him because he finds it difficult to remember large subtotals. The implicit message is that this type of mathematical thinking is worth its weight in gold on the capital market.

The good momentum from 1985 triggered a massive wave of IPOs on the Vienna Stock Exchange. Miba, Constantia, Schlumberger, the three-bank group consisting of Oberbank, BTV and BKS as well as Ottakringer went on the market in 1986. Former stock exchange boss Stefan Zapotocky, affectionately known as “Zapo” by Drastil, made great contributions to these issues in his previous role as a banker.

Drastil began his classical training in the branch. As an 18-year-old, he had to, among other things, display the stock market prices on the display – there was no internet and customers got information from the shop windows of the bank branches. As a numbers person, he could memorize the courses and quickly got into it.

The year 1987 brought the decisive turning point – in two respects. Drastil began buying stocks and warrants privately, achieved high percentage profits with beginner’s luck and spent the money first on bank clothes, then on a car, and finally just on musical instruments. But in the fall he was called up to the army. What appeared to be a setback turned out to be a blessing in disguise: three weeks after his start in the barracks came October 19, 1987, which went down in stock market history as Black Monday. Since there was no way to monitor speculative positions in the barracks, he had sold everything beforehand. This saved him from probably significant losses.

The ÖMV IPO and the birth of the Austrian stock market

Black Monday also hit the Vienna Stock Exchange hard, but the IPO pipeline continued. In October 1987, what later became S-Immo brought a winning ticket product to the stock exchange – on the day of the crash. The long-time S-Immo boss Ernst Vejdovszky later recalled: “Of course, when we made the appointment, we didn’t know that exactly this October 19th would go down in history as Black Monday. The Dow crashed by 22%. We couldn’t do anything about it, but something like that makes you tougher.”

On the other side of the spectrum was investor Gregor Rosinger, who was in the market with a short strategy and, as he put it himself, “earned a fortune.” His puts exploded and he paraded through downtown Graz with a bottle of champagne, not understanding why the bankers at a local bank didn’t want to join in the celebration – they had been on the other side of the transaction.

The big chunk of 1987 came in December: the IPO of ÖMV with what was then an incredible proceeds of one billion schillings. Investment banker Franz Kubik organized roadshows across the country. The anecdotes from this are indicative of the spirit of optimism. CFO Maria Schaumayer, who arrived in Burgenland after weeks of roadshow marathons, said simply: “Do you know what I want now? I would like a goulash and a beer.” And Dr. When asked whether ÖMV shares were not too expensive, Grünwald from ÖAG, today’s ÖBAG, replied dryly: “I believe that a share should cost more than a goulash.” To the objection that the ÖMV was too big for Austria, he replied: “If that were the case, then I would have to ask you whether Bavaria is not too small for BMW.”

As a young bank employee, Drastil himself was not yet able to accept drawing orders, but he referred numerous ÖMV draftsmen from his sports and friends circle to his branch. The seeds were planted.

The Gianna Nannini anecdote and Hermann Michelitsch as a communications pioneer

One of the most charming stories in the book revolves around Hermann Michelitsch, the long-time head of communications at ÖMV. Drastil describes him as one of the most loving, funny and eloquent people on the Vienna capital market, a pioneer of sports sponsorship and its integration into comprehensive communication concepts. Michelitsch died in 2015 at the age of 76.

Drastil’s favorite story comes from 1986, when Michelitsch had to supervise Gianna Nannini’s video shoot at the ÖMV refinery in Schwechat. It was about the pictures for the global hit “Bello e Impossibile”. Despite the strict ban on smoking – not a trivial rule when it comes to refinery air – a member of Nannini’s band lit a cigarette. In Michelitsch’s mind, as he put it up deliciously, the mental picture “Oh, now the whole hut is going to blow up” immediately occurred to us. A loud “Ah”, a sprint to the culprit, careful steaming – bad luck. The music video with the ÖMV setup can still be admired on YouTube today.

Michelitsch and Kubik also provided anecdotes during the ÖMV’s subsequent privatization in 1989. It was unbearably hot during a roadshow in a large villa in Salzburg. Michelitsch suggested inviting the men to take off their jackets. Kubik refused – an event of managers and bankers required etiquette. Minutes later, faced with beads of sweat, Kubik invited the men to take off their jackets. Michelitsch’s verbal reprimand is said to have not been ready for publication.

1988 and 1989: IPO wave, privatizations and the Verbund IPO

After his return from the army in March 1988, Drastil was finally allowed to accept drawing orders himself. The IPO wave continued: The highlight was the association going public. The legal basis for this was created by an amendment to the second nationalization law of 1987, according to which only 51 percent of the shares in energy supply companies had to be owned by local authorities.

The Verbund transaction particularly impressed Drastil. It was structured in three tranches, complicated, a bit bureaucratic, but in his eyes great. You had to read up on it to be able to explain it – and that was exactly his approach. The ÖMV draftsmen became joint draftsmen and the customer base grew.

Another contemporary witness, Markus Fröhlich, describes his parallel entry into the stock market in 1988. He also came to the capital market through a regional bank – a Raiffeisenbank. His first private investments were Lenzing shares and a warrant on the Vienna Invest stock fund. Fröhlich mentions a security that no longer exists in this form today: a warrant on a warrant, a so-called hyper-warrant.

For Drastil, this savings bank warrant 86/92 on Vienna Invest was his “favorite security ever”. The note had a negative premium and could be arbitrated on a daily basis – a strategy that only had afternoon risk, as funds like Vienna Invest were valued a day later. In nine out of ten cases, this arbitrage worked out well, and the proceeds made it possible to buy the first modest apartment of one’s own in the home district.

The year 1989 became the second super year of the decade. The recalculated ATX rose from 536 to 1,122 points. The Highflyer table read impressively: Porr-Vorzug plus 552 percent, Porr–Stamm plus 533 percent, Universale plus 521 percent. The hope was Gorbachev with his glasnost policy, and Austria’s investment story was already strongly linked to the opportunities in Central and Eastern Europe. EVN went public in the fourth quarter – a highlight and at the same time a stress test, because shortly before that the first IT-supported trading system PATS (Partly Assisted Trading System) had gone live. It worked.

Acid rain, Live Aid and the cultural backdrop of the 80s

Drastil’s story is much more than a stock market chronicle. It is a picture of the times of the 1980s that closely interweaves social, cultural and ecological issues with financial market developments.

By the early 1980s, acid rain had become synonymous with environmental destruction. The burning of fossil fuels released large amounts of sulfur into the atmosphere and trees and entire forests died. In response, measures were taken – from catalytic converters for motor vehicles to exhaust gas purification systems in industry. For the first time, the success story of economic growth and prosperity seemed to be called into question. But the acid rain was defeated, as Drastil notes, referring to a later interview with ex-Verbund boss Wolfgang Anzengruber. He just snuck out again.

The Live Aid concert took place on July 13, 1985 – a spectacle on several continents in which proponents flew from location to location in the Concorde. Drastil notes that there were no contracts or regulations at the time; the focus was on music for a good cause. Today, something like that would be classified as suspicious in advance and shitstormed, according to his assessment.

He also touches on the Chernobyl disaster in 1986: While preparing for his high school diploma on the Old Danube, he and his friends were “most likely all exposed to radiation” – not irony, as he emphasizes, but a concern that occupied him for years and possibly contributed to later skin problems.

On March 15, 1985, the first domain, Symbolics.com, was registered on the Internet – a date that later inspired today’s Formula 1 team boss Toto Wolff to create his company name “Marchfifteen”. Drastil announces that Wolff will also play a role in the book.

Musically, his decade was characterized by synth-pop and Italo disco, the Pet Shop Boys. The athletes of the year ranged from Peter Seisenbacher to Rudi Nierlich to Ulrike Maier – the latter both tragically died young in accidents. Drastil’s own school on Bernoullistraße in Vienna-Donaustadt, right next to the Donauzentrum, happened to be a stronghold of sports: student league finals in the stadium, ball boys at Diego Maradona’s only appearance in Austria, the country’s best golfers and hurdlers.

The bank robbery and other reality shocks

Not everything in the 80s was romance and rally. In 1989, Drastil’s branch in Donaustadt was attacked. A gun was held in his face. The scenario was particularly stressful because a client’s baby was crying the entire time. As the bank robber fled, Drastil ran after him too soon to block the glass doors. The perpetrator turned around again, but didn’t come back. Drastil rightly got a scolding – you shouldn’t play the hero. A photo from the surveillance camera with colleagues, customers and him on the floor was printed in the daily newspaper “Täglich Alles” – his first appearance in a newspaper.

The time spent in the army also provides stories that oscillate between absurdity and life experience. The tennis elbow that turned him from a hunter into a company clerk and suddenly gave him power over the rosters of the trainers. The episode at the post office, the nighttime fun attack on the former barracks with his buddies. What Drastil says he learned in the army: to come to terms, to give and take.

The lessons of the 80s for today’s capital market

The 1980s on the Vienna Stock Exchange were a phase of awakening. A market that took 16.5 years to go from 100 to 125 index points shot up 130 percent in 1985 to become the world’s best stock market. The IPO wave from 1986 to 1989 brought companies onto the stock exchange, some of which are still listed today – OMV, Verbund, EVN.

Drastil’s personal story shows how a generation of financial professionals emerged: not through school education, but through personal initiative, print media such as the Börsen-Kurier and practical work in bank branches. The ability to do quick mental arithmetic, taught by her mother, proved to be just as valuable as the experience of being spared by sheer luck on Black Monday in 1987.

According to Drastil’s conclusion, the 80s were “one of the best phases” – for him personally as a romantic, but also for the Vienna Stock Exchange, which woke up from its slumber. The securities and the Vienna Stock Exchange, he concludes the chapter, “should have come to stay.” What became of it in the 90s is likely to be the subject of further book chapters. The foundation – technical, emotional and biographical – was laid during this decade. The book tells the story up to 2026., 15,000 days. See also