The big news this week was, of course, the continuing standoff between Greece and Germany over Greece’s national debt, which has been creating a great deal of uncertainty in the markets ever since the new Greek government was elected. There’s been a lot of reporting on this in recent weeks from many sources – including this column! – so I’m only going to cover a few salient points:
- On Thursday, Germany rejected a Greek proposal to extend its bailout for another six months.
- European stocks rose anyway, because Greece’s proposal seemed to be adhering to ECB finance ministers’ demands.
- Greece is getting dangerously short on cash.
- Nobody knows what’s going to happen next.
The last point is probably the most important, since conventional wisdom says that uncertainty is never good for a market. Definite bad news may make prices drop, but uncertainty often prevents them from rising, or at least, not rising as steadily as they should.
But rise they have over the past several weeks, and Germany’s DAX just surpassed 11,000: an all-time record high. Investor sentiment is likewise at its highest level in 12 months, according to data released on Tuesday by the ZEW economic institute. So in spite of the continued market uncertainty over Greece (and, lest we forget, Ukraine), things are looking up for German investors.
The sad part is, there aren’t all that many of them. For years, Germany has held the dubious distinction of being a country with one of the lowest stock market participation rates. Last week, the German Stock Institute published data showing that only 13.1% of Germans invest in equities. This means that the vast majority of Germans aren’t reaping any direct personal benefit from the market’s gains. It’s too bad, because I think now is an excellent time to invest in many German stocks.
The major indices
The DAX barely squeaked over the 11,000 mark as of Thursday’s close, climbing to 11,001.94, a gain of just 0.5% for the week to date. The HDAX was likewise up only a fraction of a percent, but the other major indices performed somewhat better, with the MDAX, TecDAX, SDAX and EuroStoxx 50 all climbing between 1.43% and 1.97%.
TOPS and FLOPS of the week
TOP: Rheinmetall AG (ETR:RHM) (FRA:RHM), which manufactures car parts and defense equipment, reported better-than-expected 2014 numbers on Thursday. The stock jumped almost 7% in response, which was its best one-day gain in months and the biggest one-day gain of any HDAX stock so far this week. “Automotive again beat expectations, and defense was not as bad as expected,” explained analyst Thomas Rau of Equinet Bank AG. The company’s defense segment had an unusually strong 76% increase in fourth-quarter defense orders, which limited losses for the year.
TOP: Automaker Volkswagen AG (ETR:VOW) (FRA:VOW) was the biggest winner of the DAX so far this week, up 4.7% for the week as of Thursday’s close. The company was boosted by a Tuesday industry report that its new car sales rose 8.3% in Europe in January, and an analyst report by J.P. Morgan Chase, released Monday, that upped the price target for the company from 205 euros to 228.
FLOP: Deutsche Bank (ETR:DBK) (FRA:DBK) had the worst performance of the DAX so far this week, down 2.4% as of Thursday’s close. Financials have been disproportionately affected by the standoff between Germany and Greece, but investors may also be concerned by a Monday report from newspaper Handelsblatt, which reported that the bank plans to “slim down” its international activities.
TOP then FLOP: Shares of RIB Software (ETR:RSTA) (FRA:RSTA) jumped a hefty 6.5% on Wednesday, as the software company reported that its 2014 pre-tax profit more than doubled over the previous year — up more than 122%. Total revenue rose as well. On Thursday, however, the stock gave back some of those gains, to the tune of 2.3%, likely profit-taking, as there was no negative news from the company.
Ein erneutes Aufflammen von Corona in China, Krieg innerhalb Europas und eine schwächelnde Industrie in Deutschland in Zeiten hoher Inflation und steigender Zinsen. Das sind ziemlich viele Risiken, die deinem Depot nicht guttun.
Hier sind vier Schritte, die man unserer Meinung nach immer vor Augen haben sollte, wenn der Aktienmarkt einen Rücksetzer erlebt.