Dax gains more than five percent – Has the starting signal been given for a gold rally?

Dusseldorf The Dax kicks off Tuesday with momentum. In morning trading, the German stock market barometer is up 5.2 percent with 9191 counters. All 30 DAX values ​​are positive, Infineon paper increases by more than 11 percent. Shortly after the opening, the stock market barometer even stood at 9283 points. But according to many experts, this should only be a relief rally – a countermovement in the current, still intact downward trend.

After a roller coaster ride, the German leading index ended yesterday’s Monday with a minus of 2.1 percent and a final score of 8741 points. It was a volatile trade with a difference of almost 600 points between daily high and low.

A burden was the significant minus on the US stock markets on Monday. The Dow Jones lost about three percent, despite the huge aid program from the US Federal Reserve. An unlimited bond purchase program and various liquidity and credit programs – there is not much more.

The persistent reaction in the US Senate over the government’s aid program was probably responsible for the still subdued reaction on the US stock exchanges.

At least the stock exchanges in Asia rose significantly on Tuesday, the Nikkei index even more than seven percent. There, the corona virus is already under control in many countries. The Chinese government plans to partially lift the exit restrictions in Wuhan after more than two months after the infection rate is said to have practically dropped to zero.

Things look different in Europe: The British government also imposed a curfew on Monday and the Italian government wants to close all non-essential companies. If the rest of Europe and the United States flourished, much of the global economy would be severely hampered in the near future. “I would not be surprised if the markets quickly switch back to risk-off mode with this implementation,” says Commerzbank analyst Thu Lan Nguyen.

According to investor sentiment, such trading days with clear plus signs are currently only a countermovement in the existing downward trend. Investors should at least wait for this countermovement in order to then say goodbye to unpleasant stocks in the portfolio at higher prices and thus suffer less loss, recommended sentiment expert Stephan Heibel on Monday of this week. After evaluating the Handelsblatt survey Dax-Sentiment, he commented: “Investors should still have enough cash in reserve to remain able to act in the event of a further sell-off wave.”

With his second advice that investors can now buy shares in solid companies again, Heibel is not alone. Well-known fund manager Bert Flossbach expects a deep and sharp recession, but is already buying shares again. “My plan is: slowly increase the equity quota with quality stocks, gradually dissolve hedges, reduce cash,” says the co-founder of the asset manager Flossbach von Storch, who manages the popular “Multiple Opportunities” fund.

Look at other asset classes

The gold price is rising again. After gaining 1.4 percent on Monday, it rose another 2.3 percent to $ 1,588 in early trading. In the two weeks before, the price had dropped by around ten percent. Is the scenario of the financial crisis repeating itself?

The price of the precious metal also fell initially twelve years ago because investors needed cash and had to sell many positions. Then followed a year-long rally to a record high of $ 1921 in 2011. The purchase of gold has apparently also reached private investors due to the current crisis. Bars are currently in short supply.

The Federal Reserve’s Comprehensive Aid Program has a significant impact on the foreign exchange market. The “safe haven” dollar gave way on Tuesday morning. The dollar index, which reflects the price of major currencies, fell 1.2 percent to 101,279 points, heading for the biggest daily loss in three and a half years. In return, the euro gained one percent to $ 1.0829.

The weaker dollar, in turn, fueled the oil price. A North Sea barrel of Brent climbed 4.2 percent on Tuesday to $ 28.18. US light oil WTI cost around 5.3 percent more at $ 24.6 per barrel.

Look at the individual values

Nordex: Full order books drive the wind turbine builder’s share price. The paper gains 17 percent. The board hopes for strong growth in sales and profits in 2020 despite the corona crisis.

Cancom: The IT service provider has revised its provisional sales and earnings figures for the past year downwards due to a change in the accounting. In connection with the first-time review of the annual financial statements by the new auditor KPMG, there were reclassifications in the sales statement. As a result, consolidated sales are expected to be 1.55 billion euros in 2019. In February the company released preliminary sales of 1.64 billion euros. That is why the share loses 0.3 percent in a friendly market environment.

Rational: In view of the corona crisis, the hospital chain is facing a difficult financial year. The Rhön clinic locations are organizationally and medically prepared for the increasing number of corona patients, the company said. However, the economic impact of the crisis on the company – which also includes the Gießen-Marburg University Hospital – cannot yet be assessed. After a friendly start to trading with a gain of almost ten percent, the stock is now 3.3 percent in the red.

What the chart technique says

The technical analysts at Düsseldorf’s HSBC were right. They had forecast that the range between 8255 points – the lowest point of the crash since mid-February 2020 – up to around 8000 points offers stable support. The market was oversold, so it fell too quickly too quickly, and was therefore ripe for a countermovement, the chart technicians said.

“Normal” stock market conditions will only be possible again if the Dax can break the 10,279 point mark. This number comes from December 2018 and was the starting signal for the rally, which lifted the leading German index to new record highs.

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.

.

Stress test for companies: The corona shock: How well equipped are German companies?

Providing liquidity is becoming the most important factor in the crisis. The Handelsblatt looks at the balance sheets of 120 companies. .

How well are Germany’s companies prepared?

BMW, Daimler and Volkswagen stop large parts of their car production. The world’s largest tourism group Tui no longer sends vacationers on vacation. The Lufthansa flies only five percent of their program.

Messages unthinkable just a few weeks ago are almost part of everyday life. The fight against lung disease Covid-19 triggers a supply and demand shock in the economy: companies no longer produce, consumers stay at home.

“The comparison with a natural disaster is definitely appropriate,” says the chief economist at Dekabank, Ulrich Kater, “with the difference that we at Corona are dealing with a global situation.”

In the companies, a crisis meeting follows a crisis meeting. Where can you get capital from? Where can savings be made and how? Which suppliers are how liquid? “Every company takes a worst-case approach,” reports Simone Menne, former CFO for Lufthansa, who sits on supervisory boards such as BMW, Deutsche Post and Johnson Control. “That means, depending on the industry, you calculate a certain number of months without a cent in sales and without new loans.”

The Handelsblatt underwent all nearly 120 companies in the stock exchange segments Dax, MDax, SDax and TecDax a balance stress stress test to compare debt, equity and cash flow and to put them in relation. Another decisive factor is profitability, how much of the turnover remains as profit. This expresses the return on sales.

In the crisis, the simple trade maxim is: Cash is King. Kai Lehmann (balance expert Flossbach von Storch)

Cash flow is very important, i.e. the surplus from cash and cash equivalents, which contrasts current income and expenditure. Because even more than in conventional times in the current crisis, according to the balance sheet expert Kai Lehmann from asset manager Flossbach von Storch, the “simple trading maxim: Cash is king!”

The first result is that low interest rates have made companies carefree. Within ten years, the largest listed companies examined have increased their total financial liabilities by a good 400 billion to just under 850 billion euros. According to Handelsblatt calculations, that’s more than ever.

The easier it was for companies to get cheaper and cheaper money, the less discipline they had to save – and the greater their desire to take risks. Conversely, it would be better: “If a company has little debt,” says Lehmann, “the interest burden is also low and there is more room to manage operating expenses.”

A large number of solidly financed companies are faced with a whole range of moderately to weakly and insufficiently capitalized companies. The focus is on the equity ratio. It is about how much of the equity is in the total capital. The higher the number, the better the financial stability and thus independence from banks and bondholders.

Solidly funded companies like Adidas, Merck or Heidelberg Cement have an equity ratio of more than 30 percent. Less than 20 percent – this applies to ten companies – are considered critical. Pleasing: 32 companies have more than half of their equity in terms of total assets. That alone is considered to be very solid and sufficiently financed to survive drops on the revenue side.

graphic

Six companies even have a quota of over 75 percent. The biotechnology specialist has the highest equity ratios Morphosys, the electronics company Aixtron and the internet start-up investment company Rocket Internet with more than 80 percent each.

By contrast, Lufthansa is poorly financed with an equity ratio of only 20 percent. This is especially true in times like now, when 80 percent of European and 90 percent of intercontinental flights have been canceled. But Lufthansa reacted immediately and increased its liquid funds from 3.7 to 4.3 billion euros compared to the previous quarter. In addition, the group claims to have unused credit lines of 800 million euros.

As a precautionary measure, Europe’s largest airline is talking to the government about state aid. The prospects are good because the grand coalition of CDU / CSU and SPD wants to help the companies affected by the corona crisis.

A drastically increased guarantee framework at the State Bank KfW could make half a trillion euros available, according to Minister for Economic Affairs Peter Altmaier. “There is no upper limit on the loan amount,” added Finance Minister Olaf Scholz, “we said that this should be unlimited.”

A three-stage plan should help: starting with guarantees and KfW loans against short-term liquidity problems. The development bank of North Rhine-Westphalia alone, the NRW-Bank, has already received over 1000 inquiries from companies, including stand builders, restaurants, event companies and travel agencies.

If the economic consequences worsen, the government is considering economic stimulus programs up to temporary state holdings in strategically important companies. With all willingness to help, many questions and problems arise for supplicants.

In principle, companies do not have to fear for their existence. The balance sheets provide information about who might be dependent on aid and loans in the near future. Take Airbus, for example: The European joint venture only achieved an equity ratio of five percent in the past quarter – and is therefore underfunded.

“There will be fewer orders in 2020,” said airbus-Chef Guillaume Faury before the French Senate. The aircraft manufacturer received no new orders in February. If the crisis worsens, Europeans should help financially with their prestige property.

Well prepared, the many small and medium-sized companies are going into a downturn away from the stock exchange. This is borne out by the calculations of the German Savings Banks and Giro Association (DSGV) available to the Handelsblatt.

These are based on evaluations of data from several hundred thousand company balance sheets, which represent 50 percent of the total company turnover in Germany and are therefore of general economic significance. According to this, sales in the decade since the last major crisis year 2009 rose by a good 50, profits even by more than 100 percent.

The companies used the boom years to improve their financial cushion. Evidence of this is the equity ratio, which is at an all-time high of just under 39 percent. In the year before the 2008 financial crisis, it was a good four percentage points less. The automotive supplier Elring-Klinger increased its equity ratio from 36 percent (2008) to 41 percent in the past financial year. Debt fell from 124 to just four million euros.

This creates air in the severe crisis of the supplier industry. The family-run producer of lubricants Fuchs Petrolub His already high equity increased again sharply: the ratio rose from 45 to 77 percent. Operating profit before taxes and after interest rose by 135 percent to EUR 382 million within ten years. Debt fell from 124 to just four million euros.

There are also winners

No need to worry if you have enough reserves, a lot of equity and if possible no debt. Just like the brand manufacturer Beiersdorf. The people of Hamburg are fine, their products like Nivea, Tesa and Labello are relatively independent of the crisis.

The Bonn telecom giant is also doing well. It is Deutsche Telekom Highly indebted due to immense investments in new technologies and expenditure for customer acquisition. Net financial liabilities increased from 55.4 to 76 billion euros in one year in 2019. The equity ratio is also just under 19 percent.

In order to repay at least part of the debt and to make future investments, the group lowers the dividend despite the high cash flow of ten billion euros in the past financial year. That shows financial foresight.

Telekom does not have to fear loss of revenue as a result of the crisis. On the contrary: because more people stay and work at home, the need for paid internet services is increasing.

Also Team viewer is in a comfortable location – despite its poor equity ratio of only ten percent. The newcomer to the stock exchange and specialist for services related to home office has been seeing increased demand for its software for remote maintenance, file transfer and video conferencing for weeks. The number of connections in China has tripled since the outbreak of the corona virus.

But such “untouchables” are the exception rather than the rule. Is struck Ceconomy, known by the old name Mediasaturn. Three key indicators call for caution. With an equity ratio of 9.4 in the past quarter, the company is financially weak.

With every euro of sales Ceconomy only achieved a pre-tax profit of 1.1 cents last year. On top of that, the company would need 82 years to pay off its debts from its cash flow. That is long. More than 15 years are considered a lot.

The key figure is calculated from total liabilities minus cash and short-term securities in relation to cash flow. The smaller the number, the faster a company can pay off its debt from self-generated earnings.

Handelsblatt Morning Briefing - Corona Spezial

Even on the health specialist Fresenius After billions in takeovers in recent years, total debt of 27 billion euros. This was offset by a profit of 7.1 billion euros before taxes, interest and depreciation in the past financial year. The debt is almost four times the profit.

With a few exceptions such as the semiconductor specialist Infineon and the virtually debt-free brand group Beiersdorf, which is run by the Herz family, almost all Dax companies have accumulated more debts than they earned last year before deducting the costs.

The worst among all companies examined Thyssen-Krupp with an equity ratio of just 4.8 percent and a negative return on sales of 0.2 percent. With every euro of sales, the conglomerate burned two cents in the past year.

It would take 417 years for Thyssen-Krupp to pay off its total liabilities using the cash flow generated in 2019. No other company has a longer repayment period – apart from the few companies like Heidelberger Druckmaschinen, which recently did not achieve any cash flow.

Thyssen-Krupp has long been in a critical financial situation. To free itself from it, the conglomerate sold its elevator division for 17.2 billion euros. A good price, as experts unanimously emphasize. However, the traditional company is losing its earnings pearl and is even more dependent on the difficult and often loss-making steel business in the past.

Like Thyssen-Krupp, almost all companies have been preparing for the crisis for a long time – but for the crisis before Corona. In order to react to the global economy, which has been weakening since 2018, the board of directors of the 30 Dax groups launched efficiency programs in autumn and winter 2018/19. You want to cut 100,000 jobs with fluctuation, early retirement and severance payments.

In addition, there are savings programs with which companies want to improve their profits by a total of 20 billion euros each year in the future. This corresponds to almost a third of the total net profit in the past financial year. So strokes Bayer 12,000 jobs worldwide, that is ten percent of the workforce, to save 2.6 billion euros annually.

Volkswagen plans to cut costs by three billion euros by 2020 and another three billion euros by 2022. At Heidelberg Cement – according to the motto of CEO Bernd Scheifele “Ten percent always go” – one savings program has long followed another – regardless of whether there is a crisis or not.

A year later it is clear that the decisions were correct and above all far-sighted. Because now the global economy is no longer weak, it is in a state of shock.

Savings programs are all the more valuable. They are only now beginning to take effect and will help to ease the tension in future company balance sheets. Sufficient equity capital as a result of greater savings efforts and reduced expenses are the best prerequisites for this.
Author: Ulf Sommer

.

Dax current: Dax slips into the red – Five reasons why the time of massive price losses should still be over

The ECB rescue package is having an effect initially, but the Ifo index is weighing on prices. Other markets show drastic reactions. .

Dax builds on the previous day’s rally

Dusseldorf Despite the weak guidelines from the USA, the leading German index continues its rally of the previous day. In morning trading, the DAX rises by one percent to 12,104 points.

Today’s Wednesday and other trading days this week, the Frankfurt benchmark should answer an important question: Has the sell-off of the previous week finally ended?

A slide below the 11,800 mark would be the first indication to answer this question with no. Prices well below the multi-month low of Monday (11,624 points) are likely to lead to a further sell-off. So far there are no signs of this.

Yesterday, Tuesday, the leading index ran out of steam at the end of the trade after an initial strong relief rally that pushed prices to a daily high of 12,272 points. In the end there was an increase of one percent to 11,985 points.

After the surprising rate cut by the US Federal Reserve, the US indices fell around three percent, and the Asian markets are holding up well. The Chinese stock market barometer is up about 0.6 percent.

The key issue on the markets is the surprising rate cut by the US Federal Reserve on Tuesday, the so-called “corona cut”. After the 50 basis point cut, the market assumes that at least two further steps will follow by 25 basis points each.

More on the subject:

Although monetary policy is unable to repair supply chains, cure disease, or get people to make up for previously missed dining or theater visits, cutting interest rates on consumer and business funding helps.

The fact that the US markets fell significantly into the red after the interest rate cut is due to the uncertain consequences. What if the markets are now losing faith in the independence of the Fed because President Trump previously pushed hard for a rate cut? Does the Fed see more risks than the markets?

In any case, we live in historic capital market times: after the Fed’s rate cut, the yield on ten-year US interest rate bonds fell below the one percent mark for the first time in the history of the United States on Tuesday. In mid-February the yield was still around 1.6 percent. This makes it increasingly probable what was long thought unthinkable: zero interest rates in the dollar area. On Tuesday evening yesterday, the value for ten-year treasuries slipped to 0.9347 percent; in European morning trading, this yield was 0.9458 percent.

German government bonds are not falling so clearly because the scope for interest rate cuts in the euro area is only marginal. But the yield for ten-year federal bonds is now close to the all-time low of minus 0.711 percent at minus 0.637.

The volatility index VDax, the nerve barometer of the stock exchange, normalized again after its outlier last Friday, but is currently still at a high level with a value of 30.72. The higher this number, the higher the price fluctuations expected by investment professionals in the coming days and weeks.

On February 28, the value shot up to 41.96 as the Dax slipped 3.9 percent. In such a case, experts speak of a “volatility peak”.

The analysts at Düsseldorfer Bank HSBC have been investigating such events since 2008. The result: there were nine such peaks, eight times the leading German index was significantly higher twelve months later. In most cases, the leading German index rose by more than 20 percent. Only once, after the peak in February 2018, the Dax was down 7.4 percent twelve months later.

The statement behind the study: After such peaks, the German leading index then calms down almost always for a longer period.

Look at the individual values

Bayer: The shares are in demand after Deutsche Bank has issued a buy recommendation for the stocks. The papers gain 3.1 percent. Deutsche Bank analysts upgraded the shares to “buy” from “hold” and raised the target price to 85 from 75 euros.

Wirecard: According to a Handelsblatt report, investor protectors have filed criminal charges against the payment service provider. The allegation: he is said to have processed payments for illegal business. The group denies. The stock fell one percent at first, but is currently unchanged.

Burning day: The weak global economy is leaving clear traces on the chemical trader’s balance sheet. This is particularly true in the two major regions of Europe and North America. Sales increased last year only thanks to positive currency effects. Without these, revenues remained at the level of the previous year. The Brenntag management board wants to increase the dividend by 5 cents to 1.25 euros per share, which leads to a price gain of four percent for the share.

Evonik: The specialty chemicals company expects 2020 to be a burden from the weakening global economy. The company more than doubled its 2019 group profit by selling stores to 2.1 billion euros. The shareholders around the RAG Foundation should receive an unchanged dividend of EUR 1.15 per share for 2019. The share rises by 2.7 percent.

Dialog Semiconductor: The chip developer gets to feel the outbreak of the corona virus. Sales in the first quarter will decrease to $ 220 to $ 250 million (previous year: $ 295 million). This is also due to the virus-related interruptions at the contract manufacturers and the demand in China itself. Expected for the full year dialog with a decrease in sales of around 15 percent compared to the adjusted value of $ 1.42 billion in 2019. With an increase of 4.1 percent, the share certificates are the largest winner in the MDax.

What the chart technique says

11,624 points, this brand is the focus. Because this number is the correction low, the lowest point since the record high of 13,795 points on February 17. If the leading index does not break this mark appreciably to the south, there is a chance of a longer, sustainable bottom formation, from where the prices could rise again.

The support level at 11,800 points is also important. The leading German index slipped below this range on Monday, but was well above it at the close of trading.

Handelsblatt analyst check: UBS renews buy recommendation for the Fraport share

The major Swiss bank UBS left Fraport’s “Buy” rating with a target price of EUR 87. The headwind for the aviation industry is growing, but the recent price slumps have already priced in significant downturns, wrote analyst Jarrod Castle in a study published on Tuesday. Airports are likely to see further capacity cuts at the airport.

A total of 20 studies in the Handelsblatt analyst check deal with the Fraport share. The advice “hold” stands against eight purchase recommendations. Eleven analyzes recommend selling the paper. The weighted price target for all analyzes is 69.59 euros, which is above the current price of around 56 euros. With a weighted price target, recent studies have a higher impact.

Click here for the Handelsblatt analyst check

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,

,