Most ETF savings plans in this country run on the MSCI World. For good reason. There are success stories with Apple, Microsoft and Nvidia, each of which has more market value than all listed companies in Germany combined. Who else is causing a stir in the stock market world? Saudi Aramco’s oil wealth, for example, or TSMC’s Taiwanese technology specialists. The weight loss injections from the Danish Novo Nordisk certainly do. Also the tech group Tencent from China. Or the successful French luxury of Louis Vuitton Moët Hennessy (LVMH). The Netherlands is also ranked ahead of Germany with ASML, the Koreans with Samsung or the Japanese with Toyota. Germany does not have the global stock market darling in any industry. SAP, Germany’s number one, has developed excellently, but is certainly not among the ten largest tech companies. The Americans are far ahead among the financial groups. Among the car manufacturers, Americans, Japanese and Chinese are preferred on the stock market. The chip boom largely bypasses Infineon. The world’s major suppliers do not come from the Ruhr area, and the largest pharmaceutical and chemical stocks on the stock exchanges are no longer located in Darmstadt, Leverkusen and Ludwigshafen. Not a good outlook for Germany As is well known, the future is traded on the stock exchange, and if the stockbrokers If you get it right, it’s not a good outlook for Germany. The Dax has therefore not been a bad index for investors so far. It has risen from a thousand points to more than 19,000 points since 1988. There were lots of new highs this year. Calculated over the year, this results in a return of a good eight percent per year, which is far more than any savings book and current account has produced. The DAX benefits from a specific feature that makes it look better in an international comparison. He includes the dividends. Based on share prices alone, he would only get an increase of five percent. That’s okay too. But based on its price development alone, the American S&P 500 has returned nine percent in the year since 1988, beating the DAX including dividends. In order to display external content, your revocable consent is required. Personal data from third-party platforms (possibly USA) may be processed. More information. Activate external contentThe DAX draws heavily on previous successes, and the recent past is becoming increasingly cloudy. “We stay extremely far away from problem cases,” says Christian Kahler, co-founder and fund manager of Kahler & Kurz Capital, addressing a sore point in the Dax. “In this respect, the Dax is almost a horror story: Investors are very happy to take advantage of the high dividends, but the Dax price is only slightly above the level of 24 years ago.” So if we would just use the Dax price return of From the end of 1999 to today, there have been very meager price gains of 0.2 percent per year. And that over an entire generation. Others digested the dot-com crash better. On a price basis, the Dax was already at 6,266 points in 2000. He only did it again in 2015 before falling back again. There were further attempts in 2018 and 2021. But it is only this year that prices are, for the first time, stable, slightly higher than they were 24 years ago. Now one can argue that prices in 2000 may have risen a little too quickly and too high in some cases. This is undoubtedly true. But that was also the case in the USA and on many other stock exchanges. They just recovered much more quickly from the subsequent crash. But in the Dax, as our chart shows, five current Dax values are still below their highs from 2000. And that’s not even close. Allianz is trading 28 percent below its previous price high, Qiagen is 40 percent, Infineon is 64 percent despite the current chip boom, Telekom is 75 percent and Commerzbank is still 94 percent even after Unicredit’s share purchases recently drove up the price. Unfortunately, it didn’t stay that way Debacle after the dot-com hype. Long-time market observer Kahler alludes to this with the term Dax horror. Deutsche Bank is 83 percent below its highs before the 2007 financial crisis, while its American competitor JP Morgan has since skyrocketed to a tenfold increase in market value. Bayer’s share price collapsed as a result of the Monsanto takeover and is 79 percent below the highs from the takeover year of 2015. Dividend darlings robbed of their business basisEon and RWE, two former dividend darlings because of their stable business model, were caught in the price slide during the financial crisis and then finally crashed after the The CDU/CSU/FDP federal government robbed them of a large part of their business basis in the spring of 2011 after the Fukushima catastrophe with the hasty nuclear phase-out before state elections that were perceived as important. The shares have not recovered from this to this day, especially since energy policy later devalued modern coal-fired power plants. What remains in the Dax? The industry, of course, especially cars. But here too, one disappointment has followed the next since the diesel scandal emerged in 2015. Mercedes is still 29 percent away from the previous course, BMW 38 percent and VW even 65 percent. Suppliers like Continental were hit later, but with a gap of 75 percent from the peak, they were hit even harder. When it comes to the mobility of the future, the German auto industry is no longer seen as a world leader. Such price drops are occasionally seen as an opportunity to get started. Especially since the German auto industry is highly profitable and pays record dividends. Fund manager Kahler sees it differently: “We focus on companies with high returns on capital, i.e. companies that make high profits in relation to their capital investment.” It should be at least 15 percent, all stocks in the fund are above that, but VW, for example, is significantly lower. “They make a very respectable profit of 17 billion euros, but at what cost: 390 billion euros of working capital are used for this.” Many stocks are valued at low prices, with a return on capital of just over 4 percent remaining. Far too little for the fund manager. Like most stock market traders, he hasn’t touched German auto stocks for years. “The looming Detroit moment for the German auto industry” is what Landesbank Baden-Württemberg titled its capital market compass this week. “The industry remains in a difficult phase,” says LBBW equity strategist Uwe Streich. “The worst has already been priced into the prices, but the question marks remain as to whether German engineering can adapt to the conditions of the automotive world of tomorrow. BYD from China has caught up in electromobility and overtaken VW in sales in China. Previously, 30 percent of VW’s operating profits came from China, now it’s only 10 percent.”Many German stocks are low valued. The ratio of price to earnings (P/E) is exceptionally low, especially for car manufacturers, at 3 (VW) to 5 (BMW, Mercedes), but mainly because the K for price in the numerator went down significantly, and not because Profit in the denominator has increased. “If you take out the cars in the Dax, the rest isn’t that cheap anymore,” says Streich. “The P/E ratio is a good 15 compared to the historical median of 12.9.” German stocks are still far cheaper than American stocks, but their earnings growth is often impressively high. “Nvidia achieves a return on investment of a good 110 percent,” says Christian Kahler. “Novo Nordisk in Denmark also generates a return on investment of 75 percent. So their working capital doubles in 1.2 years.” The valuation of the shares is therefore a secondary criterion for many stock market experts; the prospects for the business model and thus for profit development are much more important. There are rays of hope The Dax is not without rays of hope in this respect . At least ten DAX stocks have reached new record prices this year. That’s not a particularly good market breadth, especially since one stock alone, SAP, accounts for a third of the upward movement in the Dax. But it is also not a worryingly small market breadth. It is often the dividend that is particularly convincing. These are the reliable business models that are emblematic of the German stock market, such as Hannover Re, Munich Re and Deutsche Börse. Added to this is the exceptional boom in the armaments stocks Rheinmetall and Airbus. Kahler particularly appreciates the high returns on capital from Munich Re and Beiersdorf. Among the secondary stocks, he favors selected stocks such as the architect software provider Nemetschek, the commercial kitchen supplier Rational and the ticket distributor CTS Eventim, also because of their good returns on capital. This means he has a German share of at least 17 percent in the fund. “We are going a little against the tide with 55 percent European stocks and only 45 percent from America,” says Kahler. More on the topic Stock strategist Streich is also currently looking at the American market with caution: “The Big 6 have had the bottom line since July 10th lost in value, but the overall American market absorbed this. The profit development in the sectors outside of the tech sector is relatively poor and has been sideways for two years,” says Streich. “For a market without earnings growth, a P/E ratio of 19 to 20 outside the tech sector is a lot, the historical median is a good 15.” Tension before the US election After the tech giants have been pulling up the indices for years, many are now betting on it a catch-up of small caps. But fund manager Kahler does not share the hope that small caps will now celebrate a real comeback after many weaker years with regard to the American small cap index. “In the Russell 2000, 60 percent of companies make losses,” says Kahler. “Almost all of the ETFs only invest in large stocks. And the economic environment is simply too weak. There are therefore many corners missing for a real small cap comeback story.” Equity strategist Streich also expects the US elections on November 5th to have a particularly large influence on the stock markets in the next few weeks and months: “The US election is this This year is a particularly important turning point. Unlike Trump, Kamala Harris does not want to extend the income tax cut by Donald Trump for everyone, but rather let it expire for income of more than $400,000. And even more important: Trump wants to reduce the corporate tax for companies, which he reduced from 35 to 21 percent, even further to 15 percent, while Harris wants to increase it to 28 percent. “That would have a significant direct impact on company profits,” says Streich. “And Trump’s planned punitive tariffs of 60 percent on goods from China could trigger a redirection of the flow of goods to Europe or other regions of the world.” They, in turn, may respond with tariffs, as the current discussion in Europe is currently showing. “Something like this can slow down the global economy and increase inflation,” says Streich. In the industry mix, Kahler focuses on IT, health and consumer goods. In addition to Nvidia, he favors Microsoft, Visa, Mastercard, Paypal and Broadcom as tech stocks. “Broadcom is exciting, they go under the radar for many people, but they are in every iPhone, supply chips and other parts for telecommunications devices and are now also investing in software.” In the healthcare sector, alongside Novo Nordisk, he relies on Idexx, a provider for veterinary products. In the consumer sector, his favorites include Beiersdorf, Unilever, Inditex and the shoe manufacturer Deckers Brands with trendy brands such as UGG and Hoka. The supposedly high ratings don’t scare him. Although the ratings in the MSCI World are currently slightly above the long-term average: “The companies are also significantly better positioned.” German exceptions confirm the rule.
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