Asset Allocation

DAX in the grips of politicians – not the economy

We are for the first time publishing forecasts for the DAX and Euro Stoxx 50 for mid-2019 which read 14,200 points and 3,900 points respectively. This assumption is based on our macroeconomic and political baseline scenario “Italy does not trigger an EMU sovereign debt crisis 2.0”. At the corporate level, rising profits, solid dividend growth and high returns on capital will further drive the bullish market underway since 2009. At the macro-level the synchronous performance of the global economy and the mix of low inflation and interest rates also helps. The greatest risks remain of a political nature – however, to date we do not expect appreciable skid marks in the economy and the stock markets. Investors should therefore remain invested and/or exploit the current price weakness to buy. By mid-year 2019 we expect the DAX to rise to 14,200 points (Euro Stoxx 50: 3,900 points), meaning by roughly 11…

MDAX moving from strength to strength – but will this continue?

The MDAX is the shooting star of the DAX index family. The index of 70 medium-weight stocks has been racing from one high to the next over several trading days. The smallest member of the family, the SDAX, has also been trading at record levels, while the leading index itself, the DAX, is still trailing six percentage points behind its all-time high. Based on our outlook for 2017, we expect the DAX to temporarily clear the 12,000 point mark in the course of the year so that the prospects of the all-time high (12,374 points from April 2015) being reached in the near future look altogether good. In a long-term comparison, the MDAX has outstripped the other DAX indices by far. Since 30.12.1987, the index has gained 11.3% p.a. while the DAX has „only“ reached 8.8% p.a. Thanks to the compound interest effect, the excess return of 2.5% p.a. has…

Equity markets in 2017 – high level of uncertainty, low risk. Quota increased.

Following the election of Donald Trump, it was as if an imaginary switch had been flipped on the stock markets that put U.S. indices in a marked ‘everything is going to be alright’ mode. The European stock markets have meanwhile also been swept up by this wave. We expect positive sentiment to continue in the equity market until spring 2017. Investors, de facto, will have no other choice in 2017 than to return to the equity markets in order to enhance the target return on mixed portfolios. Bonds and property markets are overheated and commodity investments do not offer a genuine alternative. The starting point for stock markets in 2017 is promising: the economic outlook is stable, recovery in the emerging markets is accelerating and low interest rates provide companies with attractive sources of financing. The strongly export-oriented German stocks are benefiting from the weak euro. Increased calls for a…

US labor market: Good June figures but overall deceleration in the employment trend

The official Employment Situation Summary, published last Friday by the US Bureau of Labor Statistics (BLS), confirmed the picture of a still robust employment trend. The fact that the unemployment rate is likely to decline at a far slower pace this year than in the previous year is essentially commensurate with our expectations and has therefore not come as a surprise. However, the June report also confirms that the employment trend in the USA appears to have passed its peak. This year so far, the monthly average increase in persons employed has amounted to around 170,000 compared with the same period a year earlier when the number of persons employed grew by around 220,000 persons. In 2014 the monthly increase even came close to a quarter million in the first half-year. Against this backdrop, the increase in the unemployment rate from 4.7 to 4.9 percent should not give cause for…

Little ice age almost over at the end of June

Still a disadvantageous risk-reward profile in the equity market for the time being / Delay investment decisions until after 23 June Since the beginning of March the DAX has moved as sluggishly and as sparingly as a bear in winter. The trading range of the German benchmark index was mainly between 9,500 and 10,300 points. The reporting season is over, there is no relevant company news. Only very few investors dare leave cover in view of an imminent Brexit, even though the severe negative factors of the recent past (falling demand from China and the emerging markets, fluctuating currency exchange rates, a collapse in the oil price) have been factored in and a trend towards recovery is visible. The good news is that from the second quarter onwards company reports will be better again. However, earnings growth is only likely to improve at a modest rate, and the above average…