The Prague Stock Exchange (PSE) has had a remarkable year, achieving a total return of nearly 53%, including dividends, according to the PX-TR index. This performance places it second among developed markets, just behind Israel, and far ahead of many European counterparts.

Energy and Banking Sectors Drive Growth

The market's impressive performance has been fueled primarily by energy and banking stocks.

1. ČEZ, the partially state-owned energy giant, has seen its stock price surge by around 45% year-on-year. On one record-breaking day, trading volume reached nearly CZK 4 billion, reflecting heightened investor interest amid discussions of potential full nationalization and the approaching Czech elections.
2. Banking stocks have also contributed significantly:

• Erste Group Bank climbed by 65%,
• Coin Money Bank rose 40%,
• Komerční banka gained 37%.

This growth stems from strong profitability, a favorable deposit environment, and stable mortgage conditions, boosting confidence in the sector.

Attractive Dividend Yields and Valuations

Despite the recent rally, Czech equities remain undervalued compared to many developed markets. With an average dividend yield of around 5%, they continue to be appealing for long-term investors seeking both growth and income opportunities.

Global Context

While a few smaller or more volatile markets — such as Zambia, Ghana, or Kyrgyzstan — outperformed the PSE in pure returns, the Prague market stands out among developed economies for its stability and strong performance.

Prepared by team CzechTrade Israel

Source: www.expats.cz