S&P downgrades Commerzbank’s credit rating

Deutsche Bank and Commerzbank

The rating agency warns of a significant deterioration in results.

(Photo: dpa)

Frankfurt The rating agency Standard & Poor’s (S&P) has given it a thumbs-up because of the economic impact of the corona crisis at Commerzbank, Deutsche Bank and other German financial institutions. At Commerzbank, S&P downgraded the credit rating by one grade to “BBB +”, the outlook remains “negative”, as the credit rating officers announced on Thursday.

At Deutsche Bank, S&P confirmed the rating of the creditworthiness with “BBB +”, but lowered the outlook to “negative” from “stable”. While the creditworthiness guards doubt that Commerzbank can implement its new strategy “Commerzbank 5.0”, including the planned sale of the Polish subsidiary mBank as planned, they see the restructuring of Deutsche Bank basically on track. Commerzbank and Deutsche Bank declined to comment.

With “BBB +” the credit ratings of the two largest German private banks are still three levels above the junk level. A negative outlook means that the credit rating is in danger of being lowered.

S&P warns that even if the economy begins to recover in the third quarter, all banks will see a significant deterioration in results, credit quality and, in some cases, capital resources. The risks that the economy will recover later and the situation will worsen are considerable.

At the Sparkassen-Finanzgruppe Hessen-Thüringen, which includes Landesbank Hessen-Thüringen (Helaba), S&P confirmed the credit rating with “A”, but lowered the outlook to “negative” from “stable” due to the corona crisis.

At the leasing provider Grenke The rating with “BBB +” also remained stable, here too the outlook was reduced to “negative” from “stable”. At Deutsche Pfandbriefbank (pbb), S&P left both the credit rating “A-” and the outlook “negative”.

More: False incentives, fraud, debts – the side effects of the corona crisis.


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Varta shares become the game ball of hedge funds

Dusseldorf The German Leading index Dax closed with a slight plus on Thursday. It closed 0.2 percent higher at 10,300 points. By early afternoon, the Dax had consistently posted a plus of around one percent. Then, however, he had turned negative in the meantime and then only recovered slightly.

In the afternoon, new, weak economic data was presented in Washington: Initial jobless claims last week totaled 5.245 million, a figure of 5.105 million was expected. The US stock exchanges were then initially turned negative. Recently, however, only the Dow Jones was slightly below the previous day’s level.

“The labor market in the USA is particularly hard hit by the pandemic and the associated restrictions on public life,” said the analysts at Landesbank Helaba. A total of approximately 22 million people have applied for financial support in the past four weeks.

The Philadelphia Region sentiment barometer has also weakened significantly and is even well below expectations. The index had already deteriorated significantly in March and is now at the lowest level since the mid-1980s. According to the Helaba analysts, economic worries are becoming greater as a result of the data release.

The Dax had reversed yesterday after a five-day recovery and went out of business with a minus of 3.9 percent at 10,279 points. According to chart technology, the Dax achieved a spot landing: from 10,279 points, the index started a rally in December 2018, which continued until a record high in February 2020.

A particularly interesting share is that of Varta, because the game of hedge funds with the title apparently continues. Today, Thursday, the paper rose by 6.7 percent to EUR 72.75, leading the list of winners in the MDax by far. This is no surprise, even if the share certificate at the close of trading was only 3.8 percent up: Five hedge funds are now under pressure to buy around 2.6 million shares. They may have started this Thursday.

Because the funds sold the Varta share short, as it is said in technical terms. So you’re betting on falling prices on paper. To this end, they have borrowed and sold 2.6 million Varta shareholders such as investment funds. But in order to return these shares, you have to buy them again beforehand. Of course, if possible at a lower rate.

With an average trading volume of around 272,000 shares per day in the past month, this buyback has to be carefully dosed so that the Varta price does not rise rapidly and puts pressure on the hedge funds. Because they want to buy back the papers cheaply.

Incidentally, this also explains the drop in yesterday’s Varta share of just under nine percent on Wednesday: the hedge fund Tiger Global increased its short sale rate from 1.06 percent on Tuesday to 1.16 percent on Wednesday.

With 40,421 million freely tradable shares, he borrowed an additional 40,421 papers and sold them on the day. With a total trading volume of 320,000 units on Wednesday, this sale is likely to have influenced price development.

With such figures, an analyst should say: only the fundamental values ​​are important.

According to the investor survey conducted by the Frankfurt Stock Exchange, the Dax is likely to buy again below 10,000 pointssays Joachim Goldberg after evaluating the survey on Wednesday evening. According to this survey, the mood has dropped significantly despite the rising prices, the Sentiment Index of the Frankfurt Stock Exchange has even dropped to the lowest level since the beginning of the 2002 survey.

To put it simply, negative sentiment is – according to sentiment analysis – a contraindicator because many investors have already sold.

The behavioral economist is also expecting further demand if this recovery rally should continue. “Above all beyond the 11,000 mark” there could be a sudden, rapid rise in prices (“short squeeze”) because investors would then have to buy more. But the Dax is still a long way from this point.

Look at the individual values

Zalando: The coronavirus pandemic is affecting Europe’s largest online fashion retailer. As a result of the weaker growth wants Zalando save now in the current year. Marketing and general costs are to be reduced by 250 million euros and investments by 100 million euros. Nevertheless, the company listed in the MDax average index wants to stick to its original plans and expand its luxury segment and also include second-hand goods in its range. Investors are happy about this news, the stock gained 6.2 percent on Thursday.

Easyjet: The company sees itself prepared for a longer standstill of its fleet and is pleased with its shareholders. At the start of trading, the paper gained more than ten percent and was the frontrunner on the London Stock Exchange. Most recently, however, the paper was down 2.5 percent. The low-cost airline expects to be able to survive a longer break. In addition, the bookings for winter are better than last year.

Look at other asset classes

The gold price put in its upward trend a little breather, but was recently back up 0.4 percent at $ 1,723 per troy ounce.

A side note: Because of the corona virus, the US Mint has to temporarily close its plant in New York. According to the Commerzbank– Commodity analysts are short of gold coins in particular and are distorting the gold market in the United States.

According to a coin dealer, the premiums for gold coins are already five to ten percent above the spot price of gold. After a long dry spell, the Americans bought as many gold coins in March as they did last in November 2016 at 151.5 thousand ounces, according to data from the US Mint. Demand continues: in April it was 56.5 thousand ounces again.

The bond market clearly shows: The decisions of the finance ministers last Thursday to deal with the corona crisis have no effect. The government in Rome will not apply for an ESM package. Accordingly, yields on Italian and other government bonds have risen significantly again.

Although the yield on a ten-year government bond falls to 1.805 percent, the market should soon test the reaction of the European Central Bank: when will it react to this with higher bond purchases? The yield spread (spread) between a German and an Italian government bond has increased to 240 basis points in the past few days, but is currently only at 228 basis points.

Oil prices recovered slightly on Thursday from the significant losses of the previous days. In the afternoon, a barrel (159 liters) of North Sea Brent cost $ 27.63. The price of a barrel of American WTI was little changed at $ 19.97. In the meantime, the price of US oil had dropped to $ 19.20, the lowest level since 2002.

“The oil price is at a low point, but the market could pick up again in June”

The oversupply of crude oil continues in the meantime, and the cut in production agreed by leading oil nations does not come into force until May. As the U.S. Department of Energy announced on Wednesday, stocks in the U.S. have grown significantly more than expected last week. According to the Ministry of Energy, inventories rose by 19.2 million to 503.6 million barrels. This is the strongest increase ever measured.

At the same time however, the Organization of Petroleum Exporting Countries (Opec) predicted a drastic drop in oil consumption due to the corona crisis. As can be seen from the monthly report published in Vienna on Thursday, the oil cartel is expecting the weakest demand for Opec oil in the second quarter in around 30 years.

Dealers still expect no short-term relaxation on the oil market. “In the short term, the market will remain flooded,” said Torbjorn Tornqvist, managing director of the oil dealer Gunvor Group.

What the chart technique says

According to technical analysis, the leading German index is now testing the important key support below the 10,300 point zone. On the one hand, the striking low of December 2018 with 10,279 points is important, the starting point for the rally, which lasted until the record high in February 2020. Just below that there are so-called price gaps for which there were no quotes this year. The last gap would be closed at a Dax level of 10,097 points.

The recent recovery rally led the Dax from 8255 points in mid-March to a new five-week high last Tuesday at 10,820 points. This rally remains intact as long as the stock market barometer remains above 9235 points.

If this upward trend remains intact, the next targets would be 11,030 and then 11,266 points, the August 2019 interim low.

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.


Why the boom in the German real estate market is coming to an end

VThe recession as a result of the Corona crisis on the German real estate market is unlikely to leave its mark. Depending on the segment of the market, the consequences could be very different. In addition, the role of real estate as a “safe haven” for international investors could also support the market, particularly in uncertain times. At any rate, a study by DZ Bank that the F.A.Z. is available exclusively, expects the Corona crisis to end the German real estate boom. The Landesbank Hessen-Thüringen (Helaba), whose chief economist Gertrud Traud has often demonstrated a good instinct for developments, previously made a similar statement. According to the DZ Bank study, the good economy and falling interest rates would have pushed property prices up ten years, “but the corona virus is stopping the increase.” Residential real estate and logistics and office properties would probably get away without major damage. “But it looks cloudy for retail and hotels,” the DZ Bank authors write. In addition, there is an indication that the corona crisis is giving digitalization a boost in Germany: “Flexible working and shopping could have a long-term impact on demand for office and retail properties.”

Christian Siedenbiedel

Michael Psotta

Michael Psotta

Business editor, responsible for the real estate part.

In a study, Deutsche Bank also played through the possibility that employers, not employees, could discover the advantages of home office in the crisis and consequently reduce the number of office jobs in favor of home work – also to reduce costs. According to DZ Bank, an office employee currently accounts for almost 30 square meters in Germany. With large employers in particular, this could certainly lead to a reduction in space requirements and thus in demand for office properties. However, this effect is still fraught with uncertainty.


Dividend waiver at banks – LBBW postpones decision

Frankfurt, Zurich, Stuttgart Numerous banks suspend their dividend payments according to instructions from the European Central Bank (ECB).

Landesbank Baden-Württemberg (LBBW) now also wants to postpone the decision on a dividend to its owners until autumn. The board decided to propose to the state of Baden-Württemberg, the Sparkassenverband and the city of Stuttgart, the largest German state bank announced on Thursday.

The board of directors had originally planned to propose a distribution of 259 million euros to the three owners at the general meeting in May after 250 million euros in the previous year.

Despite the ongoing low interest rate phase, LBBW had significantly increased its profit last year. At around 444 million euros, earnings after taxes were 7.5 percent higher than in 2018.

Many banks had previously declared that they would not distribute profits, most recently Aareal Bank.

Helaba and BayernLB have also suspended their dividends. According to financial circles, DZ Bank also wants to postpone the decision and payment of the dividend.

The second largest German cooperative bank after DZ Bank, the Deutsche Apotheker- und Ärztebank (Apobank), on the other hand, wants to maintain a dividend payment.

At the end of March, the Commerzbank announced in an ad hoc announcementthat she will not propose a dividend for 2019. “For the current fiscal year 2020, the Executive Board will not provide for a dividend payment until the uncertainties caused by Covid 19 have ended. After that, he will decide about it again, if necessary, ”it said.

The Dutch institutes had previously ABN Amro, ING, Rabobank and the Italian UniCredit, as well as numerous smaller financial houses in the euro area, have announced that they will not initially distribute any money to shareholders.

ECB had asked banks to waive dividends

In March, the ECB asked banks not to pay dividends for 2019 and 2020 due to the virus pandemic until at least October 1.

A similar request came from the Swiss authorities. They advised banks to “carefully consider” how high the dividends should be in the current environment. The ECB has no supervisory powers over Swiss banks.

“Although we are well capitalized and financed, we believe it is wise to follow the ECB’s recommendations,” said ING chief Ralph Hamers, who will become UBS’s chief executive officer later this year.

This gives the bank more flexibility to help customers and society fight the corona crisis. “These are exceptional times for all of us.” After October 1, ING will make further decisions about its dividend policy.

ABN Amro said that the consequences of the virus crisis for customers, the quality of the loan portfolio and the entire economy could not yet be estimated. The bank expects a record loss in the first quarter, also because a customer in the US had gambled on risky securities. ABN Amro will therefore follow the advice of the ECB and initially put the dividend plans on hold.

The major Spanish bank Santander had also announced that the planned interim dividend would be canceled. The funds should be used to help people and companies in need, the largest bank in the euro zone justified the move.

UniCredit also planned not to make a profit distribution and also to suspend share buybacks. The Munich HypoVereinsbank, which belongs to UniCredit, can, however, transfer a dividend of almost 3.3 billion euros to the Italian parent company, as Bundesbank board member Joachim Wuermeling told the “Handelsblatt”.

“With the recommendation, we want to prevent that in the current uncertain situation, distributions that may be urgently needed later flow out of the banking system. This is not the case with payments between parent companies and subsidiaries within banking groups. “

The Deutsche Bank does not meet the ECB’s dividend council, as it had already announced that it would not distribute profits for 2019 and 2020 due to its restructuring of the group.

More: The European banking supervisors are asking the credit institutions not to squander their equity but to use it primarily in Europe.


Current Dax course: Dax takes a breather

Dusseldorf The German stock market takes a breather on Wednesday. Listed in the midday trade the Dax 1.1 percent in minus at 10,246 points.

Although the Dax could Key technical chart zone in the range of 10,391 counters rise, but he could not overcome them sustainably. Sustainable means: The Dax should at least be above this mark at the close, better three trading days in a row.

In simple terms, technical chart analysts try to predict the further development of stock prices and stock indices by comparing recurring price patterns from the past with current chart graphics.

The analysts of Landesbank Helaba have past bear market rallies until 1929: Again and again there were counter movements with price increases of 30 percent after crashes on the stock markets. “In seven cases, the prices then fell so significantly that new lows followed,” the experts calculated.

The Dax is currently in a similar situation: Starting from the previous correction low of 8255 points to yesterday’s daily high of 10,590 points, the increase in the German leading index is slightly more than 28 percent.

“Not least because of this, the coming days and weeks promise to be very exciting from a technical point of view,” said the analysts at Landesbank Helaba.

Not unusual, but noteworthy: The price increases of the past two days have been accompanied by conflicting signals. Firstly, the trading volume has been average to below average.

And secondly, the VDax, the nerve barometer of the stock exchange, gone up. This means that professional investors expect significantly higher price fluctuations in the coming weeks. It is not typical. The fear barometer usually falls with rising prices and vice versa. The VDax is currently trading at 46.89 points. A few weeks ago, this value was still at the historical value of 93.30 points. The VDax only signals relaxation when the values ​​are below 20.

The US stock exchanges also gave no support on yesterday’s trading day. The Dow Jones index initially trended more than four percent stronger during the day, but then lost all gains by the end of trading and closed slightly in the red. Investors experienced the sharpest change in trend since October 14, 2008, when the Dow revealed gains of five percent within an exchange session. The Asian stock exchanges tended to be mixed.

Look at the individual values

Shop pharmacy: The online drug dealer has completed a capital increase of 65 million euros. Around 1.12 million new shares were placed at an issue price of EUR 58. The stock rose 3.2 percent after losing nearly seven percent yesterday Tuesday. Nevertheless, the paper is a winner of the corona crisis: since the beginning of the year, the paper has increased by more than 45 percent.

Vonovia: Despite the corona crisis, the housing group is sticking to its profit targets. Fortunately give Vonovia his annual goals always with a certain corridor, said CEO Rolf Buch of the “Süddeutsche Zeitung”. The share tops the Dax list of winners with an increase of 2.2 percent.

Tui: The tourism group has brought its government loan, which was applied for because of the corona crisis, under one roof. Tui has signed the contract with the development bank KfW for the bridging loan of 1.8 billion euros. Like other companies, Tui had to temporarily suspend the organizer, flight, hotel and cruise program. The stock, which was badly hit by the crisis and has lost more than 63 percent since the beginning of the year, initially rose by around ten percent after this announcement. Meanwhile, the increase in value is only 3.6 percent.

Look at other asset classes

The EU finance ministers postponed talks over a 500 billion aid package in the corona crisis after a video conference lasting several nights. Calls from Paris and Rome for joint euro bonds to build up after the crisis continue to cause considerable differences of opinion.

Because of that Italian government bond yields rise by almost six percent to a return of 1.695 percent with a term of ten years. On yesterday’s trading day, this value was now at 1.50 percent. By contrast, the yield on German government bonds fell to minus 0.335 percent after minus 0.318 on the previous day.

This postponement also has negative consequences for the euro. The European common currency falls 0.4 percent to $ 1.0844.

The weaker euro and the stronger dollar after the euro finance ministers’ disagreement initially caused the gold price to weaken. In the meantime, the troy ounce again costs $ 1,653, up 0.2 percent. According to Commerzbank’s foreign exchange analysts, the disagreement among political decision-makers in Europe speaks for gold. This would make the ECB step in as a cleaner and buy more bonds. Gold in euros should therefore soon make a new attempt at the all-time high experts say.

Before the meeting of the major oil producing countries There is hope for a reduction in production volumes on the raw material markets. Oil prices rose Wednesday after falling two days in a row. A barrel (159 liters) of the North Sea Brent increased in price by up to 3.4 percent to $ 32.96. US light oil WTI cost up to seven percent more at $ 25.29.

“It is now important that the oil price is stabilized in order to avoid unnecessary credit risks amid the already unpredictable negative economic effects of the corona shutdown,” said Jochen Stanzl, chief market analyst at the CMC Markets trading house Give sale on the oil market.

What the chart technique says

The struggle for the important mark of 10,391 points remains because the leading German index failed to overcome it at the closing price.
On the bottom there are a number of upward price gaps that show how difficult it is for investors to value the market.

Such price gaps arise when the highest price of a day remains below that of the following day. Yesterday Tuesday the lowest price was 10,225 points, the highest price on Monday was 10,097 points. Such upward gaps are important resistance according to chart technology.

“From a risk point of view, this upward price gap is predestined as a hedge,” say the technical analysts at Düsseldorf Bank HSBC. If the leading German index falls below the 10,097 point mark, this increases the risk that the index will continue to slide.

“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.