The first half of 2025 was a period of significant recovery for Central European stock markets, which is clearly visible in the attached graph showing the development of the main indices. Positive macroeconomic signals in Europe, reduced inflation, stabilization of monetary policy, and favorable developments in global markets led to a renewed investor confidence. A key role was also played by the inflow of foreign capital, which, after a longer break, once again focused on European emerging markets – with the Polish, Hungarian, and Czech markets benefiting the most. As the graph clearly shows, on the opposite spectrum is the Slovak market, which practically ignored the regional developments.
🇵🇱 Poland (WIG20): Dominance Built on Banks and Investor Confidence
The WIG20 index achieved the highest growth among all monitored indices in the first half of 2025 – +27.76%. This performance is no coincidence – it’s a combination of a strong macroeconomic foundation, a favorable political atmosphere, and exceptional performance in individual sectors, especially banks.
The Polish economy benefits from a strong trade connection with Germany, which began to recover in H1 2025 after stagnating in the previous year. Exports increased by over 6% year-on-year, supporting industrial production and corporate expectations.
The banking sector, which accounts for approximately 40% of the WIG20 index’s weight, was among the top-performing segments. Banks like PKO Bank Polski and Bank Pekao reported double-digit profit growth, benefiting from still elevated interest rates, which, although beginning to ease slightly, remained attractive in terms of net interest income.
Positive momentum was also supported by political stabilization after the elections at the end of 2024. The new government reassured investors with clearly declared pro-European stances and a commitment to fiscal responsibility.
🇭🇺🇨🇿🇦🇹 The Strong Trio of the Region: Hungary, Czech Republic, Austria
🇭🇺 Hungary (BUX) The BUX index grew by 22.41%, with MOL, OTP Bank, and Magyar Telekom shares being the main drivers. Investors reacted positively to Brussels’ announcement of unfreezing part of the frozen Euro funds, which improved market sentiment and supported the outlook for public investments.
The Hungarian banking sector was in a similar situation to the Polish one – higher rates from the previous period, stabilization of the forint, and an expected decline in inflation supported bank profitability and investor growth expectations.
🇨🇿 Czech Republic (PX) The Czech PX index strengthened by 22.33%, with ČEZ, Erste Group, and Komerční banka being the main contributors to its performance. Erste and Komerční banka were particularly attractive to many dividend investors – dividend yields were above 5%, which, combined with regional growth, ensured strong demand for their shares.
An important factor was also the relative resilience of the Czech economy, supported by stable consumption and favorable prospects for exporters. The market also benefited from low political volatility, which is a significant comparative advantage in the region.
🇦🇹 Austria (ATX) The Austrian ATX index gained +21.15%, with industrial holdings like Voestalpine, banks like Raiffeisen and Erste (whose shares are also traded in Prague), and the real estate development sector contributing primarily to the growth. The strong link between the Austrian economy and Germany, while creating some dependence, acts as a reinforcing effect during periods of growth.
April Correction: Tariffs, Trump, and the German Automotive Shadow
In the first half of April, all four growth-oriented indices experienced a significant but short-term correction associated with rising geopolitical tensions. The main trigger was the escalation of trade rhetoric by Donald Trump, who announced 25% tariffs on EU car imports and threatened to extend them up to 50% if US tech companies faced restrictions in Europe.
This threat most heavily impacted the German automotive sector, whose exports to the USA genuinely decreased in April and May – according to Reuters data, car exports fell by more than 12% year-on-year. Given the strong integration of supply chains in the region – especially in the Czech Republic, Hungary, Austria, and Slovakia – these concerns immediately reflected in the performance of regional indices.
Despite this, markets managed to react promptly and recovered within a few weeks, confirming the region’s resilience to external shocks, at least in the short term.
🇸🇰 Slovakia (SAX): A Market Without Volume, Story, or Interest
The Slovak SAX index was the only index in the red in H1 2025, recording a decline of -0.63%. This performance stands in sharp contrast to the rest of the region and confirms the long-term problem of the Slovak capital market – isolation, illiquidity, and low relevance.
Even though the Slovak economy grew stably at approximately 2.5% GDP, SAX does not reflect this development. The reasons are structural:
- Trading Illiquidity: Average daily volumes on the Bratislava Stock Exchange are well below 100,000 euros. Compared to the Prague Stock Exchange, this is a fraction of the volume.
- Insufficient Index Diversification: The Slovak SAX index consists of only six actively traded companies – Biotika, Tatra banka, Tatry mountain resorts (TMR), VIPO, GEVORKYAN and DOLKAM Šuja. Of these, Gevorkyan, as the only newer addition (since 2023), significantly weakened in H1 2025 and did not contribute to the index’s recovery.
- Absence of Capital Stories: Slovakia lacks new issues, IPOs, or significant institutional activities that could generate investor interest. The SAX’s performance is thus not a reflection of the economy, but rather of an inadequate capital market infrastructure.
Conclusion: An Attractive Region Appears Uneven
The first half of 2025 showed that Central Europe remains an attractive region for investors – especially in an environment where the West focuses on the technology sector, the region offers interesting diversification with high dividends, strong banks, and sensitive links to export industries.
At the same time, it became clear that the region is not homogeneous. While Poland, Hungary, the Czech Republic, and Austria are becoming an increasingly strong part of the European investment map, Slovakia is systematically moving away from this dynamic. Without reforms and new capital impulses, SAX will continue to lag – not due to a lack of potential, but due to a lack of opportunities.
