Last week we thought the terrible DAX development is due to the specific "German Angst" about the dispute in Ukraine. Well, today we have a different opinion.
While a week ago the DAX development was disconnected to the US market, we can see last week a reduction in US an Japan on a similar scale.
Looking for specific companies we can see how disturbing the development is. That can not be a result of economical performance. It is a drop through different business fields, it is across the board. It is a political development. Who is selling across the index? German companies or German retailers? US companies to bring money back to the US before someone is playing war again in Europe? Who has a need to sell a lot of stock in German? Who has a lot of assets in Germany?
We could learn during the last weeks that US and Europe playing tough and told the Russians their money will be frozen, there will be no access. Germany is one of the biggest business partners of Russia. Oil and Gas are sold on big numbers to Germany. They do have assets in Germany. The Western Governments were so polite to announce they will freeze the assets therefore the Russians did have plenty of time to bring the money home. That what we would do if someone will tell us we would not get our money anymore and we think that is the explanation for the terrible development last week.
The German stocks have currently a low price but it is not due to the economical situation. The performance of K+S is not an explanation for a drop of 11.93%. We do think ThyssenKrupp is a terrible company but a reduction of 8.07% is out of line. Continental is a superb company and a reduction of 6.15% is not right. It is a political market.
We think it is a good time to start to invest in German stocks. It might be worth to wait a few more days to see if the stock will go further down.
There will be no war. It is 2014 and not 1914.
But as always: Just my 5 cents
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