Bielmeiers Blog

DZ BANK

Selecting business news – analysing it – commenting on it. That’s the job of Stefan Bielmeier, Chief Economist and Head of DZ BANK’s Research and Economics Division, and of his team of analysts. In his blog, Bielmeier reports on economic developments in the world's most important economic regions, looks at trends in the international financial markets and states his position on current political events.

Bielmeier’s Blog picks out the essence of the daily data deluge for you – make use of his expert knowledge.
Equities: danger of the „dividend strategy“ myth

Nothing seems to attract investors so much as high dividend yields and their reinvestment. For some years now dividends have become the „new interest income“ among institutional investors. Individual investors have also discovered dividends and have been blogging about everything to do with „dividends as a second source of income“. There has been an explosion in the number of dividend blogs. Moreover, on websites, investors often only buy those stocks which pay the highest dividends. Many investors hardly bother with a fundamental analysis of the companies in question. A broad spread across 50 stocks or more aims to protect from risk. Special stocks (e.g. American master limited partnerships) or stocks which pay a tax-free dividend are often added to portfolios without any previous checks. Much as we welcome the fact that German investors are now also investing more in equities as part of building up a pension pot, shareholders should…

“Made in China 2025”: China’s strategy for the future – a threat to the industrialised nations?

At least since US President Donald Trump declared punitive customs duties on Chinese imports to be a declaration of war against “Made in China 2025”, China’s project for the future has been widely talked about. The objective of the strategy is to fundamentally modernise China’s industry and to put it in a position to produce the high-tech products that the country has in the past had to import. In principle this is an important, indeed a long overdue, step in the right direction. This is because China’s previous growth model – cheap mass production of relatively simple industrial goods – has become outdated with demographic change and the country’s improved level of prosperity. “Made in China 2025” is based on the concept of “Industry 4.0”, the digitisation and networking of industrial production. It is planned that, by means of digitisation, ten selected key industries in China, including electromobility and robotics,…

Shortage of qualified labour threatens growth in Eastern Europe

From the point of view of workers, the situation in the labour markets of Eastern Europe has rarely been so good. In the last few years, unemployment rates in Poland, the Czech Republic and Hungary have declined steadily. In the Czech Republic, there is virtually no spare capacity left in the labour market. Not only has the ratio of unemployed people to working-age population reached an historical low of 2.2% recently, the country’s unemployment rate is the lowest in the EU. However, Poland and Hungary also have unemployment rates of under 4% and more or less full employment. The downside of this is that companies operating in Eastern Europe are finding it increasingly difficult to find suitable staff. The shortage of qualified labour is widespread and it is nothing new: many companies have been complaining about the problem for some time in surveys. The exponential rise in the number of…

Despite the G20 Summit, equities are now facing stronger headwinds

Despite the results of the recent G20 Summit, the pace of macroeconomic growth is definitely slowing. For some time, the problems were limited to emerging markets, but it is now becoming apparent that economic growth has also peaked in a number of developed countries. The trade dispute between the USA and China, patches of weakness in Brazil, Argentina and Turkey, to say nothing of the uncertainty surrounding Brexit and the budget standoff between Italy and the EU: these factors have led to numerous profit warnings at cyclical Dax companies over the course of the second half of the year. This burdensome situation has been compounded by the structural challenges facing the German automobile industry as well as by the problems afflicting individual corporations, for example Deutsche Bank or Thyssen Krupp. It is true that domestic business in Germany is ticking over nicely on account of the high propensity to consume…

Euro area: downward trend of our leading economic indicators continues

GDP growth is likely to continue to weaken in the euro area at least until spring 2019. This is shown by the current data for DZ BANK’s Euro-Indicator, which fell for the tenth consecutive time in November. The Euro-Indicator has recently shed 0.2 percent, falling to a level of 99.3 points and is thus now 2.0 per cent lower than in the previous year. As our leading indicator is able to forecast the economic trend for the coming one to two quarters with a high degree of reliability, no growth trend reversal may be expected in the euro area until spring 2019 at the earliest. In November six of our nine individual indicators charted a weaker trend. However, unlike in the previous months, the downside movement did not start in the industrial sector this time. Whereas all three key metrics from the manufacturing industry (incoming orders, production forecasts, purchasing managers’…

Euro area inflation at 2% – domestic price pressure remains low

The flash estimate for consumer price inflation in the euro area was 2% in November and therefore 0.1 points lower than in the previous month. At 9.1%, energy prices in the basket of consumer goods rose again sharply, albeit not to the same extent as in October, when they climbed by 10.7%. Food products inflation was also somewhat more moderate at a high level, while the increase in services inflation was weaker. Inflation has therefore been above the ECB’s target of “below, but close to, 2%”, for six months now. Nonetheless, domestic inflationary pressure in the EMU remains muted. This is evident from the core rate of inflation, which excludes the more volatile price components of unprocessed food and energy products. It fell from 1.2% to 1.1% in November. Stronger inflationary pressure would require a much stronger and more permanent increase in the core rate, and there is still no…