With the fall of the DAX to below 4000 points, investments expert Michael Schürmann of Gries & Heissel Bankiers AG warns of further losses.
After a sobering start to the year, a bad mood has spread on the stock market given the bleak economic news. It is not the time to be taking risks and, as we can't predict the risks that still lie within the company accounts, uncertainty reigns, acknowledged by losses on the stock market.
Look at what businesses have reported over the last quarter of 2008, and you will find little good news. American companies in particular have suffered heavy losses. The earnings of the principal S&P 500 Index businesses have shrunk by over 30% when compared to the previous year. These results confirm fears for the current market trend, but may also no longer be relevant.
First signs of improvement
The deciding question on the stock market is rather whether the recession trough can be crossed in the second half of 2009, or whether this will happen only later. This would increase the probability of a continued downturn. We are of the opinion that the first signs of improvement can definitely be seen. The economic stimulus packages that have been put together in many countries at least offer potential for stabilising the economy. The latest ZEW economic outlook and the IFO business forecast also show evidence of this trend. Even if the current assessment of the situation judges that we may not have yet reached the bottom, there seems at least to be a gradual return of confidence for future development.
Further losses expected
A technical analysis of the stock market conditions confirms the general view. Since the low levels in October, nearly all markets have developed laterally under strong fluctuations and there is now still the chance of the market bottoming out. Should the economic signs improve, the stock markets would certainly expect to stabilise and get back on course. The latest data from the finance and motor sectors shows the stabilisation of the stock markets to be in danger once again. After the DAX yesterday fell to under the all-important 4,000 mark, further losses must be expected, 10 percent is therefore realistic.
A defensive positioning therefore seems appropriate. As long as no upswing presents itself, the strongly fluctuating stock markets only bring profit for short-term investors. At the moment precious metal alloys and gold mining shares on the other hand are interesting. They promise protection in the current crisis and should be able to profit in the long term from the increase in deficit spending.
By Michael Schürmann
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For further information:
Martina Fassbender
Telephone: +49 (0) 611 773 25 71
Fax: +49 (0) 611 773 14 25 71
E-mail: martina.fassbender@deltalloyd.de
Website: www.deltalloyd.de
Notes to editors:
About Gries & Heissel
Gries & Heissel Bankiers AG, headquartered in Wiesbaden, is an exclusive banking house with branches in Wiesbaden and Berlin which concentrates on private banking services. Since it was founded in 1987, the private bank has been providing its exacting clients with comprehensive individual consultancy services, focusing not on selling products, but on developing a tailor-made financial plan, measured precisely to the risk appetite, current stage of life and personal preferences of the client. For further information visit http://www.guh.de/