Dax is heading towards 11,000 points

Dusseldorf The leading German index is currently unstoppable. In the first hour of trading the Dax 1.3 percent increase and is traded at 10,703 points.

The German leading index has risen by more than 2,500 points since mid-March. You can marvel at this rally and believe in a renewed sell-off wave. But the fact is also: According to chart technology, the situation has eased significantly.

According to many technical analysts, the significant price gains in the past are more than just a bear market rally, an intermediate recovery in the intact downward trend, but a sustained upward trend.

“As a result, the DAX should continue to rise, with the area around 11,025 / 11,032 points representing massive resistance,” say the technical analysts at Düsseldorfer Bank HSBC in her morning comment today.

Investor sentiment remains with a critical assessment of the situation. Investors should continue to sell positions that they would not keep in a new sell-off wave, advises Stephan Heibel after evaluating the current Handelsblatt survey Dax-Sentiment. “I wouldn’t run after the courses because the courses now reflect a lot of hope,” he says. Reality should be gradually presented in the coming weeks through company figures.

Positive trading data from China spur the market on Tuesday. Exports shrank in March, but not nearly as much as feared. The People’s Republic had recently relaxed the massive restrictions on public life.

Should China now come with a comparatively small economic loss from the pandemic, that would be positive for the global economy, said Thomas Altmann, portfolio manager at QC Partners.

Hopes of the peak of the coronavirus epidemic hitting Asian equity markets skyrocketed on Tuesday. The Nikkei even rose 2.8 percent.
But the crucial data for future stock market developments come from the United States.

At midday in Central Europe, the US banks JP Morgan and Well Fargo as well as the pharmaceutical and consumer goods manufacturers Johnson & Johnson new business figures. The banks’ prospects in particular are likely to influence the Dax curve.

Because not only the disastrous economic development in the US, but also the key rate cut by the US Federal Reserve is a burden for US banks.

The US standard values ​​started yesterday’s Easter Monday with losses in the new week. But the US futures contracts signal a trade opening at 3:30 p.m. Central European 1.7 percent higher.

Above all, the bank stocks there are benefiting from the economic easing in neighboring Austria. The Bawag– and the Raiffeisen papers increase by more than six percent at the opening of the trade, leading the European banking index. Erste Group’s stocks rose by more than three percent, as did the Austrian selection index ATX.

Look at other asset classes

The euro is rising. In the morning, the common currency was trading at $ 1.0944 after just a little above $ 1.09 last night.
This rise has more to do with the friendly mood on the stock markets than with the Eurogroup’s agreement last Thursday on the corona crisis.

It was a compromise that didn’t make either side happy. The supporters of corona bonds did not because they were not decided. And not the opponents, because they were not excluded in bulk.

“This is how Europe squandered every chance to establish the euro as a” safe haven currency “”, the currency analysts of the Commerzbank.

Oil prices hardly react the decision to cut oil production in the 20 largest industrialized countries.

A barrel (159 liters) of the North Sea type Brent costs $ 32.20, up 1.4 percent. The price of a barrel of American WTI for May rose 0.8 percent to $ 22.60.

Because the weak demand continues. Accordingly, market observers do not expect a sustained recovery in oil prices. According to estimates, the slump in demand as a result of corona virus containment restrictions could reach up to 35 million barrels a day.

Look at the individual values

Eon: The share is one of the few losers in the Dax with a minus of almost two percent. According to traders, they were created by the experts at the US investment bank Goldman Sachs downgraded to “Sell” from “Neutral”.

Wirecard: The paper from the online payment service provider tops the Dax list of winners with a plus of four percent. The share certificate has come comparatively well through the stock market crash. The price has risen by around 25 percent in the past four weeks, since the beginning of the year the minus has been only 0.65 percent.

“When planning wealth, the rule is: never get out completely!”

Here is the page with the DAX course, here is the current tops & flops in the Dax. Current Short sales of investors can be found in our Short sales database.


Equity strategy: Investors go bargain hunting in the crisis

Many European companies got under the wheel on the stock exchange. Despite further upheavals, analysts are again seeing exciting buying opportunities. .

Analysts go bargain hunting in the crisis

Gas station of the French oil company Total

Analysts like the company’s comparatively low debt

(Photo: Reuters)

Frankfurt Analysts and investors with strong nerves are already looking for entry opportunities on the stock markets. Even if, in the view of many strategists, the prices should drop even further in the short term, there are already numerous papers in Europe that are considered to be overly cheap.

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Sale of Commerzbank subsidiary M-Bank is a long way off

Another major project of the “Commerzbank 5.0” strategy, on the other hand, has come to a standstill: Negotiations to sell the majority stake in the Polish M-Bank are on hold, according to the Handelsblatt. Experts believe that the goal set by CEO Martin Zielke in December of completing the sale by the end of 2020 can hardly be achieved.

Because of travel restrictions and barring contacts, it is currently impossible to conduct negotiations in Poland, said several people familiar with the subject. Many things like a tightened book check could not be done by video conference. In addition, Commerzbank currently needs a large part of its resources to deal with the crisis in Germany.

Commerzbank has not yet given up its goal of selling M-Bank. The team put together for this continues to exist.

Nevertheless, according to insiders, doubts are growing at the Frankfurt headquarters whether a successful sale can still succeed. The sales revenue originally targeted by Commerzbank could no longer be realized after the corona crisis, several people familiar with the negotiations told Handelsblatt.

A look at the Polish stock exchange underpins this assessment: M-Bank’s market value there has almost halved since the beginning of the year – from 3.9 to 2.1 billion euros. The value of Commerzbank’s 69 percent stake has thus fallen to 1.45 billion euros.

Just one bidder

In addition, M-Bank sales were difficult even before the outbreak of the corona crisis. Initially, a large number of institutions expressed interest in the fifth largest Polish bank, which is considered to be one of the most innovative financial institutions in Europe. These included the Polish subsidiaries of the major European banks BNP, Santander and ING as well as the Austrian Erste Group.

However, given the positioning of the national conservative government in Warsaw, which is committed to the “repolonization” of the financial system, foreign buyers have now said goodbye to the sales process.

The only serious bidder left, according to financial circles, is the second largest Polish bank, Pekao. The Polish state is indirectly involved in this through the insurer PZU. That other Polish institutes like Alior and PKO BP have not made an offer, was probably a political decision because the state also participates in these institutions, says banking expert Filip Mazurek from the consultancy firm Sollers.

The development is anything but encouraging for Commerzbank. Due to the lack of competition, negotiations had been difficult for the people of Frankfurt before the outbreak of the crisis, several insiders report. “Of course, if you only have one bidder, you won’t get the price you want,” said one of them. Commerzbank and Pekao were far apart in their ideas.

Speakers from Pekao and Commerzbank did not want to comment on the topic. CFO Bettina Orlopp said in mid-March that Commerzbank was still trying to sell M-Bank, but not at any price.

When its new strategy was announced in September, Germany’s second largest private bank assumed that it would have to sell M-Bank in order to finance its upcoming restructuring. Since the capital situation of the institute has improved, according to Orlopp this is no longer the case. “It still makes sense to sell M-Bank – but only if we can achieve the target price and if the transaction structure is right,” said the CFO. “Otherwise there will be no deal.”

“Sales process impossible at the moment”

The transaction structure is primarily about dealing with a multi-billion dollar loan portfolio in Swiss francs. M-Bank, like other Polish institutions, had awarded these on a large scale before the financial crisis. Because the Polish zloty subsequently depreciated significantly against the Swiss franc, the borrowers’ loans became unexpectedly expensive.

In October 2019, the European Court of Justice (ECJ) ruled that such loan contracts could become ineffective if they contained unfair terms. Polish courts have to decide in each individual case whether this is the case.

Since the ECJ ruling, the number of lawsuits and the number of cases in which Polish courts have ruled in favor of customers has increased significantly. M-Bank therefore had to significantly increase its provisions for these loans.

According to financial circles, Commerzbank hopes that it will be able to sell the franc loan portfolio in the course of an exit from M-Bank. In previous sales processes, the Polish regulator KNF had forced foreign banks to keep the franc loans.

Handelsblatt Morning Briefing - Corona Spezial

Consultant Mazurek does not believe that an agreement can be reached in the foreseeable future. “In my view, there are little to no chances that the transaction will advance in 2020,” he says. The prices are in the basement, the problems with franc loans are getting bigger.

The corona crisis would also pose many additional challenges for the banks. “There will be economic problems, bankruptcies and debates about loan extensions,” Mazurek said. “That makes a sales process impossible at least at the moment.”

The rating agency Fitch also has doubts as to whether Commerzbank can implement its strategy as planned. “Commerzbank is in the middle of a substantial restructuring that we believe could be thwarted by the ongoing crisis,” warned Fitch at the end of March.

From the perspective of those involved, it is difficult to predict how the M-Bank sale will continue after the end of the corona crisis. It would be no problem for Commerzbank to keep M-Bank, some say. However, this option is not particularly attractive because the Polish authorities have forbidden the M-Bank to transfer a dividend to Frankfurt for several years.

In addition, there is hope in Poland that Commerzbank will need the sales proceeds and the risk relief associated with an M-Bank sale sooner or later – and will therefore return to the negotiating table. “It is all just a matter of time,” predicts a person familiar with the negotiations.

More: Commerzbank board members warn – “The peak of the crisis is still ahead of us”


Austrian money house Erste Group withdraws outlook

Head office of Erste Group Bank in Vienna.

Vienna Erste Group bank withdraws its outlook for the current financial year. The Austrian institute announced on Wednesday that the forecast would only be updated as soon as the economic effects of the crisis were more quantifiable.

“This decision is based on evidence that has been increasing for weeks that the coronavirus-induced exit restrictions, despite cushioning measures by politicians, central banks and regulators, have led to a significant deterioration in the economic outlook,” said the bank, which is active in many countries in Eastern Europe.

Measures such as loan repayment moratoriums could have a negative financial impact, it said. Accordingly, it can also be assumed that risk costs will increase and credit quality will probably deteriorate, albeit from very favorable starting values.

The bank had already reviewed the dividend for the past financial year last week. According to previous plans, the institute wanted to distribute 1.50 euros per share. The Annual General Meeting, originally planned for May 13, was postponed to a later date.

Previously, Austria’s largest money house announced an increase in operating income (EBIT) for 2020. In the past financial year, an operating result of almost three billion euros was achieved. In addition, the return on equity (ROTE) should be over ten percent, the bank announced as part of its capital market last autumn.

More: This is how the banks in Greece, Italy and Spain are doing


AMS is confident about a billion dollar capital increase

Dusseldorf The time for a capital increase worth billions could hardly be more unfavorable: The Austrian sensor specialist AMS wants to collect more than 1.6 billion euros to partially finance the takeover of the much larger competitor Osram.

In addition to the financial investor Temasek, who holds more than five percent of the shares, other important AMS investors also wanted to participate in the capital increase, the Handelsblatt learned from the AMS environment. According to industry circles, there are also hedge funds that could secure additional shares.

The deadline for the capital increase expires on Monday. In the past weeks there had been doubts as to whether the new shares could be placed with investors at all. AMS had already had to make big concessions on the price anyway; the new shares will be offered at a price of CHF 9.20.

For comparison: in autumn the AMS rate was CHF 32. In order to collect the desired amount, AMS had to offer 190 million shares. The AMS share price had temporarily dropped below CHF 9.20 in recent weeks. It was just above it at the end of last week.

The capital increase is made by the banks HSBC and UBS such as Deutsche Bank, Erste Group and others. If there were not enough interested parties for the new shares, the financial institutions would have to add the shares to their books.

AMS is relaxed

If the banks remain on too many shares, they may even have to make a takeover offer to the other shareholders. However, the capital increase could still be stopped due to a “change in the financial markets, an accident or a crisis” – as stated in a clause in the prospectus.

In the AMS environment, you are relaxed. There is definitely interest in new shares – even if nobody currently wants to quantify how high it is. If shares ended up with the banks, they could sell them later – possibly at a profit – it said. In addition, AMS has secure bridge financing with which the Osram shares could also be financed without a capital increase.

AMS had offered more than four billion euros for Osram. The Austrians already bought more than 20 percent of the shares on the stock exchange and secured the majority with the offer of EUR 41 per share, which has not yet been completed.

In German industrial circles, many feel confirmed in the face of the problems facing Austrians. “The capital increase is completely on the ropes,” says one from the Osram area. It is quite possible that a large part of the new shares will end up with the banks.

It is risky to rely on bridge financing. Because then the new group would push even higher debts. In view of the emerging economic crisis, AMS should find it difficult to reduce the mountain of debt as soon as promised.

It remains to be seen what will happen if the AMS financing model shakes and the pressure from the banks increases. “The only way out is actually that someone buys the Osram shares from them,” says German industry circles. After all, there are still financial investors who are basically interested in Osram. For example, the financial investors Bain and Advent had long bid for the ex-Siemens subsidiary, but were eventually cut out by AMS.

Strategic takeover still makes sense

In view of the unclear situation and the corona crisis, the Osram share price had fallen from 45 to temporarily 26 euros in recent weeks. When AMS confirmed its expectation to complete the acquisition in the second quarter last week, the price skyrocketed. At the end of the week it was around 32 euros.

Many investors were and are convinced of the strategic sense of the takeover of Osram from the AMS perspective. The Austrians solve two problems with it. In a consolidating market, they alone had a difficult position as a small to medium-sized player.

With the takeover, AMS can also be dependent on major customers Apple reduce. AMS is doing good business with the mobile phone manufacturer – however, a theoretically conceivable listing would be difficult for AMS.

More: Osram cashes the annual forecast due to the corona crisis


Corona virus stops the boom in Eastern Europe

Vienna The corona virus put an end to the economic boom in Eastern Europe. “This is the worst year since the financial crisis with major downside risks,” said Executive Director of the Vienna Institute for International Economic Comparisons (WIIW), Mario Holzner, on Tuesday in Vienna.

After the outbreak of the financial crisis in 2008, the region experienced a slump in economic growth of more than five percent. But it shouldn’t be that bad this time. “But we are not yet assuming that,” said the economist from Eastern Europe.

The Vienna Economic Research Institute expects growth of only 1.1 percent this year. The prognosis is that the coronavirus crisis will end in six months.

The WIIW had previously forecast growth of three percent for the region. The economic research institute, founded in 1973, is financed by the Austrian government, the Austrian National Bank, the City of Vienna and the Chamber of Labor.

The four factors of production, tourism, aviation and energy are particularly difficult for the countries from the Czech Republic to Russia. The Commonwealth of Independent States (CIS) – the successor states of the former Soviet Union – was hit hardest. The massive drop in oil and gas prices due to the sharp drop in demand is particularly troubling Russia and Kazakhstan.

In addition, the health system is overwhelmed as a result of the pandemic. Holzer referred to the poor health care system in the countries of the Western Balkans and the CIS countries. “We have better prospects in the Czech Republic and Slovakia,” said WIIW economist Richard Grievson.

The “pessimistic forecast” announced by the Vienna Eastern Europe experts on Tuesday, however, still contains many unknowns. For example, the economists underestimated the negative pull effect of the stock market crash and its effects on companies.

For example, the market capitalization of the Russian oil company Rosneft has more than halved within four weeks due to the coronavirus crisis. Should the pandemic also last longer, the earlier economic recovery could very quickly turn into a profound crisis. For Russia, the WIIW predicts a decline in gross domestic product of only 0.1 percent this year.

Meanwhile, the Viennese economists do not see the risk of growing public debt in Eastern European countries. “We will have very low interest rates globally for years, even decades,” predicted Holzner.

The former CEO of the Eastern Europe Bank Erste Group, Andreas Treichl, is also convinced of the stability of the Eastern European financial system. “The systems from Poland to Croatia are all very healthy and are among the best capitalized systems. It can be expected with great certainty that no negative developments will come from this region. I see no danger there, ”said the banker, who until recently headed Austria’s largest bank for twelve years, said this week. If the coronavirus crisis is overcome within a few months, WIIW economist Holzer believes that the economies, including the financial systems in Eastern Europe, will recover quickly.

Automotive industry suffers

At the beginning of the crisis in February, there were first signs of a massive slump in the Eastern European EU countries. The companies, particularly in Hungary, Slovakia, the Czech Republic, Poland and Croatia, were extremely pessimistic.

The reasons are obvious. For example, the Czech Republic has above-average trade with China. Due to their close ties with Italy, Slovenia and Albania felt the effects much more than other countries in Eastern Europe.

The years of the boom are passé for an uncertain time. For example, for Slovakia, which has been booming in recent years due to the automotive industry, economists are only forecasting GDP growth of 0.8 percent. Volkswagen is the largest employer in the country with its plant in the capital, Bratislava.

The lack of legal security in the EU country now threatens to take revenge. Most recently, an expert from the German-Slovak Chamber of Commerce and Industry sharply criticized the miserable prosecution of white-collar crime in Slovakia. “At the moment, procedures that are at first glance obviously fraudulent and should be prosecuted are being dismissed by the police and public prosecutors as” commercial disputes “, which is understandably causing great frustration for the affected, injured companies,” said Margareta Sovova, legal expert of the Bratislava Chamber.

More: Economist Felbermayr expects the “mother of all recessions”


Erste Group puts digital plans for Germany on hold

Dhe leading Austrian bank Erste Group has temporarily put the plan on hold to enter the German market with the digital platform “George”. The responsible board member for private banking at the institute, Peter Bosek, justified this step on Friday with the fierce competition among digital banks in Germany. The so-called “Challenger” providers include Revolut and N26.

Michaela Seiser

Michaela Seiser

Business correspondent for Austria and Hungary based in Vienna.

On the one hand, the speed of development is so rapid that it is questionable whether the infrastructural part can grow back to the same extent, said Bosek. On the other hand, it could be that the business models converge between online and offline – as for example at ING. Only when the market situation has been clarified will Erste Group decide that “George” is the leading pan-European banking platform.

Erste Group had been a promising candidate for the takeover of the Polish Commerzbank subsidiary M-Bank for months, but then refrained from a takeover offer. The new CEO Bernhard Spalt still mentioned Poland on Friday as an exciting target market for his institute.

“Poland remains interesting,” he said. It would be an issue as a non-euro area even in the long-lasting low euro interest rate environment and is so far the only large market that is missing from the Group’s Eastern Europe network. Erste Group is one of the major players there. Otherwise they want to grow in the existing markets, organically as well as through possible acquisitions. Otherwise you don’t want to venture into large new markets. The online platform “George” is very likely to conquer new markets.

Erste Group had to put aside little money in the past year to protect itself against loan defaults. The share of non-performing loans in the total loan volume (Non Performing Loans Quote / NPL) has been reduced to below 3 percent. “At 2.5 percent at the end of 2019 there was the lowest NPL ratio since the IPO in 1997.” The shareholders of the majority of the free float are offered a dividend increase from 1.40 to 1.50 euros per share.