KPMG: Majority of AEX companies did not see pandemic as a risk | NOW

Only 7 of the 25 AEX companies saw a pandemic as a risk in 2019. This is evident from a study by accountancy firm KPMG, which looked at the most recent annual reports of the companies listed on the Amsterdam stock exchange and published about it on Monday.

This includes Heineken, Ahold Delhaize, Randstad and Shell. The research shows that less than one in three AEX companies saw a pandemic last year as a threat.

Listed companies always state in their annual reports the risks they run or think they run. According to the KPMG study, companies usually focus on finance, legal issues or market conditions. However, non-financial risks have become increasingly important.

Then it is not just about climate change and cybersecurity, but certainly also about the risk of a pandemic. Moreover, according to KPMG, due to social inequality and the limited availability of water, more and more non-financial risks are added. If companies already mention these risks, the possible financial consequences are not mentioned.

The accountancy firm also believes that companies look too much at the short term when determining the risks. Of the nearly 450 risks identified by the various companies, only 4 percent relate to the long term.

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The end of the special stage is postponed again

Munich / Frankfurt The completion of the special audit at Wirecard shifts again. “Wirecard AG was recently informed by the auditing firm KPMG that KPMG will present the results of the ongoing special investigation on Monday, April 27, 2020,” the group said on Wednesday evening.

“In the remaining days, incoming data should be processed and taken into account,” is the official reason for the postponement. From an investor’s perspective, it was particularly important: “No evidence was found for the publicly alleged manipulation of the balance sheet,” the group continued.

Specifically, in the four business areas covered by the audit order, third-party partner business, pre-financing of receivables and the activities in India and Singapore, “there have been no substantial findings that would have required correction for the annual financial statements in the 2016, 2017 and 2018 investigation period.”

KPMG has been checking the balance sheets of the payment service provider from Aschheim near Munich since October 2019. This was preceded by a year-long debate on Wirecard’s business practices. For the final report now announced for Monday, Wirecard again promises to make it available on the homepage.

Serious allegations

Numerous serious allegations prompted the special audit. Since January 2019, the British business newspaper Financial Times (FT) has published a series of articles on opaque contracts and dubious partners of the group. Above all, the inconsistencies in the important Asian business raised bad suspicions: Has Wirecard manipulated its balance sheet?

After the pressure had risen for months, Wirecard attempted the exemption in October – and commissioned KPMG’s auditors to carry out a special audit of the balance sheets from 2016 to 2018. Today’s postponement represents the second extension of the audit period.

The group had already presented a partial report of the test results at a late hour on March 12. At that time, however, the auditors only achieved partial information about the accounting methods at Wirecard.

They only brought light into three of the four sub-areas examined. The auditors made initial relief statements on two company acquisitions in India in 2015, on financial irregularities at the Asian headquarters in Singapore and on the area of ​​pre-financing of receivables, also known as “Merchant Cash Advance” (MCA). The group defines MCA as loans to small retailers who use the Wirecard platform for their payment transactions.

“From today’s perspective, these parts of the special investigation did not result in any substantive findings in these investigation areas, which would lead to the need for correction for the annual financial statements in the investigation period 2016, 2017 and 2018”, Wirecard had announced in March.

Problematic third parties

At that time, the auditors did not allow themselves to make any statements regarding the particularly important fourth point: the controversial third-party business – i.e. the question of which parts of Wirecard’s sales were generated with the help of external companies.

In October, the FT had posted clear doubts about cash flows via partners in Dubai and Ireland in a ten-page article. The report was enriched by internal and external documents. The focus was on Wirecard’s partner Al Alam from Dubai. This is a so-called “third party acquirer”, which handles the payment transactions in countries where Wirecard does not have its own licenses.

The essence of the allegations: According to FT, Al Alam should have generated around half of its consolidated earnings before interest, taxes and depreciation in 2016. According to the newspaper, the company from Dubai was responsible for sales of EUR 265 million and an “Ebitda effect” of EUR 173 million, according to internal documents.

According to the FT, the business of 34 key Wirecard customers was processed through Al Alam in 2016. They came from the United States, Europe, the Middle East, Russia and Japan.

As a result, the newspaper said it had tried to contact all of these business partners. Accordingly, 15 of them had never heard of the Al Alam name, six did not answer, five could not be identified, and eight of them had already stopped doing business.

Wirecard boss Markus Braun had always denied all these allegations. Now he should feel confirmed by the statement approved by KPMG that no “evidence of balance sheet manipulation” was found in the third-party business either. The mood in the group is good, reports a Wirecard manager. But KPMG wanted to be very precise.

Time-consuming examination

The special test was carried out with great effort. In the meantime, around 40 auditors rummaged through the balance sheets. These had already been approved by the long-standing group auditor EY, whose care, however, was in doubt. The audit is tricky for KPMG: Society knows that its reputation is now at stake.

Today’s “Day X” was planned for Wednesday, the moment of truth. Management hoped to finally draw a line under the accusations of the past with the publication of the test report. The fact that the publication is now postponed a second time shortly before the end after half a year of the exam shows how high the stakes are – and how far the Dax-Newcomer Wirecard is still far from the standard of other large corporations.

Why the relocation? According to insiders, KPMG also checked incoming numbers from third parties earlier this week. Wirecard now officially justifies the extension. According to groups of companies, the data with a probability bordering on certainty did not contain any greater risk for the balance sheet – nevertheless, they are not irrelevant and must be checked by KPMG.

Apparently, it is not only late-arrival data sets that cause problems. According to insiders, Wirecard is also struggling with KPMG to clarify the wording of the test report. There is relief in the most important – on the balance sheet – points, such as the allegation of so-called roundtripping, the invention of sales. Nevertheless, the auditors had made numerous negative findings, for example regarding compliance and internal processes.

Now the question is how serious the corresponding complaints in the test report were. The KPMG auditors formulated significantly more negative than expected, it is said from corporate circles. The corresponding talks continued.

Change in the supervisory board

Wirecard’s new Chairman of the Supervisory Board, Thomas Eichelmann, oversees the review. According to two people familiar with the matter, there is a change on his committee. The previous supervisory board member Susana Quintana-Plaza is promoted to the operational board of the Portuguese oil and gas group Galp Energia and leaves the Wirecard committee at the request of the Galp owner family.

The successor is apparently already certain: A “very well-known personality” should therefore take the place of Quintana-Plaza and strengthen the competence in the control committee. First, the “Wirtschaftswoche” reported on the possible exit. This should not be related to the special test.

With the coming Monday there is now a new end date for the KPMG audit. However, a third extension of the review period is hardly possible: Wirecard plans to publish its 2019 annual balance sheet on April 30. And the group auditor EY apparently does not want to test this without the final KPMG assessment for the special audit.

The payment processor can no longer afford to make mistakes. The KPMG report is sure to attract the keen attention of investors, analysts and regulators. According to insiders, he is also being studied closely by the financial regulator Bafin.

More: Alleged balance sheet fraud, dubious partner: Wirecard has been at the center of criticism for over a year.

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Dax on a recovery course despite further oil price turmoil

Dusseldorf The German stock market starts trading nicely. In the first trading hour, the index was up 1.1 percent at 10,357 points.

The oil price has dominated the market for the second day in a row. The renewed sell-off on the oil market shows that the historic collapse late Monday evening, which temporarily pushed the price of US crude oil down to minus $ 38 a barrel, was not a singular event, not a one-time market failure. It was only the preliminary climax of a crisis that the oil market has never experienced before.

The answer to the question is crucial: If the June futures contract falls on the US variety WTI as well as the May future below zero dollars in the coming weeks?

The price of a barrel (159 liters) of the US grade WTI for delivery in June has dropped to $ 10.30 today, a drop of more than ten percent. The Brent crude price reached $ 15.98 a barrel, the lowest since June 1999.

Netflix’s strong numbers are reassuring on the stock markets. Due to the corona crisis, the streaming service has reached the record number of 15.8 million new subscribers worldwide in just three months. The cautious outlook sent the stock Although one percent in the aftermarket in the US markets, it could have been worse. On the German stock market, the paper rose 3.2 percent at the opening.

The requirements from overseas are mixed. The US markets have given in significantly, but were able to reduce their losses slightly after the market closed in Germany. The futures contracts on the US stock exchanges signal an increase of 0.2 to 0.5 percent at the start of trading. The prices of the shares on the Tokyo stock exchange fell for the second day in succession after the US crude oil slump, and the Chinese indices rose.

Dates today

The most important number comes from the USA: Because of the oversupply of tank farm capacities, which are apparently almost exhausted worldwide, investors are paying attention to the figures for the US inventory in the afternoon of Central European Time.

On Wednesday, however, company figures are also in focus. Among other things, pose AT&T, Roche and the US tech exchange Nasdaq released their quarterly figures. Chip manufacturer STMicro and US laboratory supplier Thermo Fisher also wrote their books. The latter wants the German competitor Qiagen take over for a good ten billion dollars.
Main focus on the impact of the coronavirus pandemic on business, Börsianer said

Look at individual values

Wirecard: The “Day X”, the moment of truth is there for the online payment service provider: The final KPMG report is due to be published today – in full, how Wirecard has promised. Management hopes to finally draw a line under the debates of the past. At the opening of the stock exchange, the Wirecard share rose by 2.8 percent.

In the run-up to the publication of the quarterly figures, hedge funds had increased their speculation on falling prices at Wirecard. This quota is now 4.28 percent of all freely tradable shares, i.e. 45.27 million shares. (As of April 20)

Further rising prices are likely to put hedge funds under pressure. Because such a short sale, a speculation on falling prices, follows the following principle: So far, the hedge funds have borrowed and sold the 45.27 million shares of Wirecard 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 1.65 million shares per day this buyback of 45.27 million is not easy to implement.
In the past four weeks, the Wirecard share has increased by more than 40 percent, almost 14 percent since the beginning of the year.

STMicroelectronics: Europe’s largest chip manufacturer expects a decline in sales as a result of the collapse in demand in the auto industry due to corona virus. A minus of around ten percent is expected in the second quarter. However, the share price increases by 4.3 percent. The German competitor also benefits from this Infineon. Infineon paper increases by 2.7 percent.

What the chart technique says

There is currently a lot at stake with the leading German index, the German “blue chips” have a lot to lose. If the break in core support proves to be sustainable at around 10,300 to 10,000 meters, according to chart technology, investors must assume that it has a “second pillar”. Specifically, that means: The Dax should drop again towards 8255 points and in extreme cases even undercut the mark.

The closing price on Tuesday was already below the important mark at 10,279 points. The leading index started its rally of 10,279 points in December 2018, which lasted until a record high in February 2020. The brand was “confirmed” on Tuesday last week because the index had ended trading there.

Despite the friendly start on Wednesday, investors should look south. In the course of the upward recovery, two so-called upward price gaps have remained open since mid-March. With such gaps there was no price position during Dax trading, the lowest price on a trading day was higher than the highest price on the previous day. Such upward price gaps are an important resistance, according to chart technology.

The first gap is closed when the 10,097 points are reached, the second at 9,627 points.

At 11,025 meters there is an important resistance on the top. There is the so-called 50 percent correction of the overarching trend, at which counter-movements very often end. Currently related to the Dax, this means that the downward trend has so far been from the record high in mid-February at 13,795 points to the low point in mid-March at 8255 points.

The 50 percent mark is accordingly at 11,025 points, i.e. exactly in the middle between record high and low point. With the increase to 10,820 points last Tuesday, the index of this brand had already approached. But the focus is currently on the lower price brands.

“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.

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A woman’s shadow lies over SAP – Morning Briefing

Good morning dear readers,

if Germany can show something with pride in the battle of the big digital corporations, it is SAP from Walldorf, the invention of five ex-IBM forces 48 years ago. So it borders on self-harm that after only six months co-CEO Jennifer Morgan already logged out again. So forget all the great portraits of the first boss in the Dax, delete the hymns of praise of the chairman of the board and co-founder Hasso Plattner. According to our knowledge, the implosion at the top is also the result of an internal power struggle. Co-boss Christian Klein carries out a strong standardization and centralization, the American wanted the subsidiaries more independence to let. Even the PR candle from Walldorf cannot hide the dispute between vanities, according to which clarity and determination are necessary in the Corona period. Aristotle thought that to hide a mistake with a lie was to replace a spot with a hole.

In the beginning it advised Robert Koch Institute refraining from autopsying Covid 19 dead, it is too dangerous. From Basel in Switzerland, where there were fewer concerns, the first results of an examination of 20 coronavirus deaths are now coming. They suffered from high blood pressure and Overweight, but above all there was a serious disturbance of the Microcirculation the lungs – the oxygen exchange no longer worked. The Hamburg medical examiner Klaus Püschel also had 100 virus victims examined, according to a report by NDR, WDR and “Süddeutscher Zeitung”. Similar to Basel is also here none of the dead without previous illnesses been.

New York futurologist Amy Webb speaks this week in the “Handelsblatt Disrupt” podcast.

(Photo: Getty Images)

Has become a trend researcher Amy Webb made a name worldwide. This week the New York professor speaks for Strategic future planning in the podcast “Handelsblatt Disrupt” with my colleague Sebastian Matthes. In the interview, Webb predicts the division of the world into two: in part with the People’s Republic of China and its partners, who used a digital surveillance infrastructure, as well as the rest of the other countries. China is using the crisis to expand the Artificial intelligenceto collect even more data, believes Webb. But data are like Algorithms the weapons of the future. And so it does Futurologist in the end worries “that the global pandemic will trigger an economic-technological war that we have never seen before”.

The days of rest in the Dax group Wirecard are over: Today, the final special report of KPMG’s auditors is to be published – on allegations dubious contracts and partners who have been featured in a Financial Times (FT) series. Bafin boss Felix Hufeld wants to study the work of the auditors carefully: “Payment service providers, like banks, must adhere to a comprehensive set of rules.” Bafin’s own investigations into who is involved strategic sales benefited from Wirecard shares prior to the release of “FT” items have been completed. The investigation by the Munich public prosecutor’s office, which uses the Bafin work, continues. According to our information, the German auditing agency for accounting has meanwhile also an investigation of the Wirecard balance sheet check initiated. So this company will soon be as open as an oyster after consumption.

Series hits like “Tiger King”: Netflix increases the number of paid subscriptions.

(Photo: AFP)

Corona time is Netflix-Time. You follow “social distancing”, stay at home and watch series after series, film after film. There is nothing else to be inferred from the most recent figures, the Streaming primus announced last night. After that, the number of paid subscriptions rose in the first quarter by 15.8 million to almost 183 million – which exceeded both the own forecasts and the expectations of the analysts. Series hits like “Tiger King” around Joe Exotic and its big cat zoo are so well received that Netflix is ​​expecting 7.5 million new customers worldwide this quarter. Since the profit has also doubled at the moment, the share is growing again. The company of Reed Hastings is now worth more than the big rival Disney.

The Germans decided to end the season prematurely Handball player – and selected it THW Kiel according to an elaborated calculation model to master. in the Soccer After the Belgian league, the Dutch league also decided to end the season due to the corona restrictions. And in Scotland there is also an end in sight – that of the European association Uefa, contrary to what was announced, will not be punished with the exclusion of clubs from competitions. New regulations that take the corona virus into account are to be presented tomorrow, Thursday. That day, too German soccer Bundesliga decide that ghost games should continue in May. This is the only way to secure a rate of EUR 230 million from Sky for broadcasting rights – and many clubs first before broke rescue.

And then there’s the world performance artist Marina Abramovicwho first silenced her for years Online campaigns breaks against them. “Can’t you stop doing that?” Asks Abramovic, “don’t you see, that’s the art I’ve been doing for 50 years?” She really isn’t a “satanist” – a suspicion that her opponents have been stirring up since becoming one “Spirit Cooking” dinner loaded. Recently, ongoing anonymous online protests have resulted in Microsoft a work with Abramovic, who promoted digital technologies, removed from the YouTube platform after 24,000 dislikes. She is looking for a positive way out of the matter, says the native Serb, “anxiety is the worst human emotion ”.

I wish you a positive, completely fear-free day. And if it consoles you: in 2020 we will experience art and performances again in the museum.

Greetings to you warmly

Hans-Jürgen Jakobs
Senior editor

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Morning briefing: Alexa

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Patriarch Kerkhoff is back in the corona crisis

Düsseldorf, Munich Gerd Kerkhoff, 62, had barely been to his Düsseldorf consultancy for six months. He left the operational business, along with 30 percent of the shares, to Co-CEO Frank Wiethoff, 51. A perfect successor solution should become a reality. But last Tuesday, 6 p.m., the founder was present again – and how.

On March 31, when salaries were supposed to be received, he announced the 110 employees in a virtual switching conference. From his home on Tegernsee, the 40 percent shareholder spoke about the consequences of the corona crisis in his own shop. It was about stopped projects, tight liquidity – and now solidarity is necessary.

In one fell swoop it became apparent that one of the best-known German medium-sized consulting firms is struggling to survive. This week it is decided whether the Kerkhoff Group will receive public help in time and thus avoid the impending imbalance.

Of all people, the specialist who has won several awards and optimizes purchase prices, processes and costs for his customers, now has problems with his own organization. This follows on the one hand from the crash of the markets, on the other hand the change of leadership plays a role.

The 2019 Wiethoff maintains a different style than Patriarch Kerkhoff. The former regional executive board east of the KPMG group outsourced accounting to an external company, which probably led to confusion and non-payment of travel expenses – a “faux pas” by Wiethoffs, according to one employee. So it happened that he now has friend and foe. In March Heinz Scheve gave up the management.

Gerd Kerkhoff takes stock of the current situation in an e-mail sent to the Handelsblatt. The situation would mean that “we will not be able to meet our payment obligations on time and will not be able to pay the March 2020 salaries and bonuses 2019 on time,” he writes.

It is assumed that the delay in payment of salaries can be remedied by April 15 at the latest. The 2019 premiums would only be paid “after the Corona crisis has been overcome”, “planned for 2020”. With regard to travel expenses, on the other hand, “all measures have already been initiated to pay out all outstanding travel expense reimbursements by the end of this week.”

The business graduate told the Handelsblatt that he had sent all the documents for one of the loans currently granted by the State Bank KfW and its main bank, Sparkasse Vest Recklinghausen. He had been working with her for 35 years, when he was the manager of a coffee roaster in Dorsten.

“Time-consuming process”

They are relying on KfW’s financial support, says Kerkhoff. However, contrary to what politicians say, this is “a time-consuming process”. For a few weeks now, Corona had “almost completely brought business to a standstill” and “driven us into a drastic liquidity bottleneck”.

Previously, the Kerkhoff Group would have had a strong order intake, “2020 would probably have been the best year in our company’s history”. Now the solidarity of employees and management is also in demand: That is why he is now “helping personally now with loans and guarantees”.

Communication problems can hardly be ignored. In the intranet (“Kerkhoff Weekly”), Wiethoff, for example, always gave a general reason about Corona in business. No wonder that the return of the “old” amazed the staff just as much as the fact that an estimated 800,000 euros for salaries are missing within a few weeks. Kerkhoff points to the special features of the consulting business: Larger reserves – for example for the purchase of a machine – are not necessary. In addition, some top employees are involved and also made a living from distributions.

In April, short-time working will be avoided if the savings bank actually approves it. However, this measure will also take effect at Kerkhoff in May. Then the struggle for survival intensifies – with Kerkhoff as “primus inter pares”. He is a “founder, a doer who did intelligent things,” says an ex-manager.

Insolvency is “not an effective means of corporate management,” says the patron and only hopes for a future boom in consultants: “We want to survive the corona crisis, that’s a real management task.”

More: The consultants fear the corona crisis – and benefit from it

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Dax closes up 11 percent – Daimler grows

“The Dax shows hope again today”

Dusseldorf The Dax lets forget the high losses of the past few days. At the close of trading, the German stock market barometer was up 11 percent on Tuesday at 9,478 points. All 30 DAX values ​​are positive, the Daimler paper even 27.3 percent. 17 papers increase by a double-digit percentage.

But according to many experts, this should only be a relief rally – a countermovement in the current, still intact downward trend.

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Corona meets the real estate world

Erfurt Shops have to close, trade fairs are canceled, rows of office workers are ordered to their home offices, industrial production sites are shut down, thousands of people are sent in short-time work – it is becoming increasingly clear that the economic consequences will also affect the real estate world as a result of the corona crisis. It is difficult to assess the concrete consequences. Nevertheless, the industry could even benefit from the crisis.

The consequences are most evident in retail properties. In many countries, including Germany, governments have ordered most of the shops to close. Stefan Genth, the managing director of the HDE dealer association, estimates that non-food retailers lose EUR 1.15 billion a day. In three to four weeks there could be bankruptcies, he says in an interview with the “Frankfurter Allgemeine Zeitung”.

The owners of the commercial real estate must also adjust to this. Earlier this week, Unibail-Rodamco-Westfield (URW), Europe’s largest shopping center operator, issued a message to its investors. The group is in dialogue with its tenants. But at the moment it is still too early to see the consequences for your own business. URW has property assets of EUR 66 billion. The share has lost two thirds of its value since the beginning of the year.

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The SDax company German Euroshop wants to cut the dividend as a precaution. The share has lost 60 percent of its value since the beginning of the year. Shopping center operators are also feeling the loss of sales at retailers. Rents that are linked to sales are common in this area. “There is often a basic rent plus a share of the success in sales,” explains Birger Ehrenberg, CEO of the Federal Association of Real Estate Investment Experts (BIIS). The owners could cope with the temporary loss of rent, says Ehrenberg. “The real risk is bankruptcy of the dealers,” he says.
Retail owners had previously suffered. This is shown by the current ZIA-IW Real Estate Mood Index (ISI): At the beginning of the year, the situation fell by 30 points to only 65 points. Overall, the barometer ranges from minus 100 to plus 100 points. The mood has probably deteriorated further.

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How quickly the situation is changing is also felt by Hans Volkert Volckens, Head of Real Estate at KPMG. The industry was still negotiating deals two weeks ago. But now the requests from clients for support in the crisis have increased significantly. Volckens urges prudence. “The companies now have to soberly analyze their portfolio and tenant structure, assess possible rental losses and weigh up their own financial risks overall,” says Volckens. The need for advice in the hotel sector is now “intensive”. This is often about securing liquidity in the company. That is what the Reutlingen hotelier Hans Joachim Neveling demands. He operates five hotels in Baden-Württemberg, two of which he has already closed temporarily, and short-time work applies to three properties. In his Reutlingen hotel, he otherwise has 95 percent business travelers. Of the 160 rooms there, twelve were still occupied.

Deals under pressure

According to media reports, the Bavarian Chamber of Supply has imposed a stop of at least four to six weeks for investment decisions in the real estate sector. Deals will continue to be reported. In most cases, however, these were threaded in before the corona crisis. In the background, investors explain that new business is often severely hampered. “Visits no longer take place,” says an insider.

In addition, legal uncertainty is spreading on the real estate market: what happens if a tenant can no longer pay rent due to the crisis? The German Tenants’ Association and the GdW have called for an aid fund to protect tenants and landlords against potential loss of rent if tenants struggle with lost income. Vonovia and German living, the two largest landlords in Germany, have declared that they will support their tenants. Lawyers such as Julia Haas, partner and real estate law specialist at the Freshfields Bruckhaus Deringer law firm in Frankfurt are also feeling the increasing need for advice from tenants and owners. “Our clients are primarily concerned with the topic of rent reduction,” says Haas. For example, the question arises whether tenants can reduce the rent due to a lack of rent or a disruption in the business situation. There is no general answer. “In principle, however, the use risk of the property lies with the tenant,” explains Haas. That means: If the operation is restricted by official requirements, this is initially a problem for the tenant, not the landlord. However, it could become a landlord problem if the building becomes unusable due to certain property-related defects. At the moment, however, it can also be seen that landlords and tenants agree on the question of rent payments in order to cushion emergencies. The city of Hamburg has instructed its real estate companies to offer commercial tenants a three-month delay in rent payments if necessary. “In the private sector, rent deferrals are also agreed where it appears necessary,” says Haas.

Even with Gerhard Molt, specialist lawyer for tenancy and residential property law at the law firm Eversheds Sutherland, “the phones are running hot”. In addition to tenant rights issues, building contractors face challenges: Molt says there are already significant disruptions on almost all major construction sites. Skilled workers from the Czech Republic, Poland, Italy and many other countries can no longer enter the country, and there are sometimes supply difficulties with special components. “You will have to look closely at the delays and additional costs that are actually caused by the corona crisis and which problems actually have other causes,” says Molt.

In return, the expert Ehrenberg does not expect abrupt price drops in property valuations. This is good news for private investors who have invested their money in open-ended real estate funds, for example. “Real estate is not valued on the stock exchanges like stocks on a daily basis, but rather sustainably and on fixed deadlines,” says Ehrenberg. This leaves room for hope: If the spread of the corona virus can be curbed, the consequences for property values ​​could remain manageable.

In case of doubt, the real estate market could also benefit from the crisis: central banks have lowered their interest rates and relaxed monetary policy. Until the very end, this was the basis for the real estate boom. “Once the current state of shock is over, it is likely that demand will pick up in many real estate segments,” said Ehrenberg.

More: Six things the ECB wants to calm the financial markets with.

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Dax group Wirecard: Clarification in installments

Frankfurt / Munich Markus Braun can breathe a sigh of relief, at least for the time being. The KPMG special test has Wirecard relieved in large parts. Clarification is still pending in other areas. It is therefore quite possible that the CEO of the payment service provider from Aschheim near Munich will have to answer further questions in April. The group initiated the special audit in October. Their goal: finally draw a line under the serious allegations that the British business newspaper Financial Times (FT) had made against Wirecard.

In 2019, she examined four areas in a series of articles: an expensive takeover in India, financial irregularities in Singapore, the pre-financing business (MCA, Merchant Cash Advance) and working with third parties. The FT suspected abysses everywhere – and incriminating details at hand. In the end, the pressure became so high that Wirecard brought KPMG’s auditors on board. As a result, around 40 experts re-examined the balance sheets of previous years.

Wirecard presented an interim result on Thursday night. It brings partial relief: In the first three areas of India, Singapore and MCA, the auditors see no effects on the annual financial statements for the years 2016 to 2018. However, the investigation of the controversial business with third parties is ongoing and should not be completed until April 22.

Wirecard had actually promised the final report for the end of the first quarter. However, on Thursday evening, the six-member Supervisory Board advised the new chairman Thomas Eichelmann and approved the interim announcement.

Relieved investors

For the first time, investors were given an insight into the special audit that has been running since October 21. The burden of serious allegations of dirty accounting practices, money laundering and possibly fake customer relationships has now become at least a little easier.

And although the KPMG auditors have not given full absolution, many investors reacted soothed. At the start of the stock exchange on Friday, Wirecard shares rose by almost 30 percent after having been one of the biggest losers the previous day with a minus of more than 18 percent. The significant plus also continued during the day, at least 4.5 percent remained at the end of trading.

Traders did not attribute the growth to renewed trust alone: ​​instead, they also blamed the price drop to EUR 83.50 on Thursday. The share price had been lower than the low point around a year ago when the first serious allegations of irregularities in Singapore had caused the price to fall.

Several hedge funds, which had bet in the past few weeks on a fall in price, would now have sold some of their positions with high profits, according to a trader. That relativizes the significant price increase on Friday.

Criticism of extended examination

Volker Brühl, Managing Director of the Center for Financial Studies at Frankfurt University in Frankfurt, cannot recognize the hoped-for liberation in the communication. “As an investor, the announcement would not calm me down,” says the ex-investment banker. “The fact that the testing period was extended over several weeks shows that there is obviously still a considerable need for testing in the area of ​​critical third-party business.” This is astonishing in view of the audit procedures that have been going on since October.

The analysts who deal with Wirecard also give a differentiated picture. Your course goals range from 136 to 270 euros. At the latest price level of just under 90 euros, this would still offer plenty of potential even in the worst case. Hannes Leitner from the major Swiss bank UBS, one of the most down-to-earth analysts, had only retained his assessment this week after a specialist conference with CEO Braun.

The day after the partial relief still belonged to the optimists: analyst Knut Woller from Baader Bank saw the first encouraging insight into the not yet finished special exam in a first reaction and maintained its high target price of 240 euros.

In the eyes of observers, there are signs that the group is finally opening up: Wirecard promised in the message that “in the sense of transparent processes, the complete KPMG investigation report would be published on the homepage immediately upon receipt”.

In the past few weeks there had been various messages about the manner in which the KPMG special report would be published. Would it go public in whole or in part? And would a deeper or only a filtered insight be possible for investors? The speculation continued.

For a long time, when the incidents in the important branch in Singapore were investigated by the external law firm Rajah & Tann (R&T), it was said that Wirecard would publish the complete report. In the end, however, there was only a thin message from around two pages, which had criticized the German Association for the Protection of Securities (see interview).

Problematic third party business

Despite some positive signals: The crux of the current publication remains the previously unexplained section on business with third parties. These so-called “third party acquirers” handle payment transactions in countries where Wirecard does not have its own licenses.

This is where Wirecard’s biggest problem was recently. The trigger for the special inspection by KPMG was ultimately a ten-page FT article in October. Enriched by internal and external documents, payment flows from Wirecard via partners in Dubai and Ireland were questioned.

The focus was on Wirecard’s partner Al Alam from Dubai. According to the FT, around half of the company’s profit before interest, taxes and depreciation was achieved in 2016. According to internal documents, the Dubai company was responsible for sales of EUR 265 million and an “Ebitda effect” of EUR 173 million.

According to FT, the business of 34 key Wirecard customers was processed through Al Alam in 2016. They come from the United States, Europe, the Middle East, Russia and Japan. According to the Wirtschaftszeitung, it tried to contact all of these business partners. Accordingly, 15 of them had never heard of the Al Alam name, six did not answer, five could not be identified, and eight of them stopped doing business. Wirecard sharply contested this representation.

The interim status of the special audit now published does not provide any clarification regarding these particularly serious allegations: the third-party business is to be examined for a further six weeks. Only then is this part of the investigation still to be completed.

Difficult coordination

A key sticking point for the examination of the third party partners “at exotic locations” was that some of them did not want to open the books for KPMG, insiders report. Here one is in intensive discussions. In addition, there were also numerous language barriers and technical restrictions with the cooperative partners. Accounting documents for the years between 2016 and 2018 are not available in a uniform format from third parties. Accordingly, data would have to be elaborately determined.

The auditors at EY, who have been checking Wirecard’s books for more than a decade, are now waiting for the auditing of the 2019 annual accounts for KPMG’s special auditors to finalize their investigation. For this reason, the publication of the balance sheet originally planned for April 8 was postponed by around three weeks to April 30. A year ago, the announcement of the balance sheet also had to be postponed.

An indication of problems? “The fact that the presentation of the 2019 annual financial statements is also postponed indicates that the auditors cannot rule out a need for correction,” concludes at least finance professor Brühl.

However, there is no pressure on KPMG, says Wirecard. The auditors made their own decisions regarding the progress of the audit. Apparently they would have seen the chance to clarify open questions in the third-party business in the extension of the examination period. The new supervisory board chairman Thomas Eichelmann has repeatedly welcomed a particularly thorough examination.

The global outbreak of the corona crisis had also hindered the review. According to corporate circles, the willingness of KPMG auditors to travel had dropped significantly since the first cases at the beginning of the year. Flights to the Middle and Far East were particularly affected. Particularly there, however, particularly intensive tests with third-party partners were necessary. However, the situation in Asia has now calmed down. Currently in Dubai are being checked, KPMG representatives were also traveling with a Wirecard board in the Philippines, insiders report.

However, the corona virus itself has no noticeable impact on Wirecard’s business. At a conference a few days ago, CEO Braun admitted that the pandemic had a certain negative impact on his company. Failures in air traffic and tourism, however, would be offset by higher sales in online trading.

The message from Thursday night was received very positively by Wirecard employees. “This is the hoped-for liberation. The mood with us is relaxed, ”said a manager of the payment service provider on Friday. Although it was clear: “It would certainly be good if the exam had been completed earlier.” However, one had to see the large scope of the task.

The final clarification will probably only bring the publication of the KPMG final report. Until then, at least in-house, Wirecard boss Braun can be lenient when organizing the investigation.

More: Many questions remain unanswered for Munich investor Daniele Bergdolt in the Wirecard case.

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“The message is not satisfactory”

Daniela Bergdolt

Early asked for an independent special review of the allegations.

(Photo: Bergdolt Lawyers)

Frankfurt Daniela Bergdolt is Vice President of the German Association for the Protection of Securities. She has been dealing with for years Wirecard and pleaded early for an examination of the serious allegations.

Ms. Bergdolt, how do you rate the interim result now published?
The message is unsatisfactory. The renewed postponement of the annual financial statements increases uncertainty for investors. And the explanations of the group are difficult to understand.

The auditors give the green light for the Singapore and India business and the factoring area. Isn’t that positive?
Yes, that’s a good signal. We can check off the debates about Singapore and India. No further adjustments to the balance sheet are to be expected here beyond the corrections already made.

Then why your critical judgment?
KPMG has been checking the books since the end of October. Now it is March. I just don’t understand why after all these months we still don’t have an official result. This raises questions: Why is the exam so difficult? Are Wirecard’s partners not providing sufficient information, and if so, why? After all, the examiners are obliged to maintain confidentiality. Or is the group walling? We just don’t know.

Wirecard explains the delay with extensive external reviews and corona-related travel restrictions.
An insight into paper files should hardly be necessary. Wirecard is a payment service provider. His business is the transfer of money and data. An extensive travel activity does not seem necessary. And why does the interim result have to be published in the late evening after a stock market crash? None of this is satisfactory.

What needs to be done to restore investor confidence?
The group must finally become more transparent instead of acting like a start-up. The fact that the KPMG test report should be published in full is a positive step that we have long requested. The announcement must also be followed up by action. The R&T report was only supposed to be published, then there was only a skinny summary. In addition, Wirecard should consistently separate itself from all partners who have prevented KPMG from viewing the books.

More: Wirecard has published partial results of the special audit. Not all experts view the result positively.

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Dax closes in a slight plus and returns profits

Dusseldorf The Dax finished trading up 0.77 percent at 9,232 points after rising nearly 7 percent to a daily high of 9,985 in the early afternoon. The leading German index has thus almost completely returned its interim profits.

As expected, trading was volatile. Friday was at least a slight recovery in the stock market index after losing around 23 percent in the past week.

The initial optimism among investors was overshadowed by the plans of the US president. According to circles, he wants to declare a national emergency due to the coronavirus outbreak, as the Bloomberg news agency reports.

He said he would rely on the Stafford Act to provide more federal aid to states and communities, as two people familiar with the matter said. The President announced a press conference for 3 p.m. Washington time (8 p.m. CET).

The Fed had recently announced that it would accelerate its planned purchases of government bonds to ease the pressure on the markets. She plans to buy $ 60 billion in government bonds next month.

The global stock markets crashed yesterday, Thursday, the Dax lost 12.2 percent and fell below the 10,000 point mark for the first time since 2016. In the end, he recorded 9161 points. This is the second largest daily loss in the history of the Dax.

A historical comparison shows: On October 16, 1989, the minus was 12.8 percent. However, the Dax only lost 203 points at the time because it was only 1385 points.

On Wall Street, investors can take a breath this Friday. The Dow Jones opened up 4.7 percent, but later the profits crumbled again.

The corona virus crisis is having an increasingly negative impact on the US economy: US consumer sentiment deteriorated significantly in March in view of the pandemic and falling share prices. The consumer confidence bar fell 5.1 to 95.9 points, the University of Michigan said on Friday’s monthly survey.

In addition, the data indicated that further losses of trust could be expected, the university said. Because the virus continues to spread. Private consumption is the most important pillar of the US economy because it contributes around 70 percent to economic output.

To mitigate the effects of the corona crisis on the German economy, the federal government has decided to help companies with unlimited credit programs. It provides the KfW with around 20 billion, says Peter Altmaier. KfW can lend companies up to EUR 550 billion to ensure that they survive the pandemic and protect their employees from the effects of the pandemic, Altmaier said.

According to Finance Minister Olaf Scholz, Germany is ready to assume additional debt and will consider comprehensive fiscal incentives if the situation worsens. The decision of the federal government may have been a reason why the Dax recovered.

In addition, according to state aid from the federal government and EU investors, the risk of bankruptcies is lower. The “Markit iTraxx Europe Crossover” index, which serves as a barometer for the insurance costs of European companies, gives 85 basis points to 493 basis points.

But do today’s price gains mean the end of massive losses on the German stock market? Several indicators clearly signal no. One only has to look at the behavior of private investors, who are already speculating on rising prices.

The Stuttgart Stock Exchange’s Euwax sentiment, which is formed from real trades with Dax leverage products, is again speculative. Investors have significantly more call in their portfolios than short products that benefit from falling prices.

Such behavior after the crash days is a classic contraindicator because when prices fall, investors quickly sell again. Stock exchange experts know that a sell-off only ends when there are hardly any sellers left.

Even if institutional investors are a little more cautious, there are still too many optimists in the market. “The hope of many actors that everything will turn out for the best is still too great,” explained Joachim Goldberg after evaluating the sentiment survey of the Frankfurt Stock Exchange.

Felix Herrmann, capital market strategist of the asset manager Blackrock, sees it similarly. He doesn’t believe in an end to the sell-off. “My expectation is that stocks will be even cheaper in the next few weeks,” he says.

When asked “If the Dax will be higher in twelve months than today”, he would answer “yes” – in the short term, it could only go further down at first.

Ulrich Stephan, chief investment strategist for companies and private customers of the German bank, expects further fluctuations on the stock exchanges to continue in view of the opaque situation for companies and analysts.

At the moment, the sell-off has the side effect of cheaper prices for investors who have been waiting for entry opportunities. The valuation levels have dropped significantly, measured by the price-earnings ratio, Dax and Stoxx 600 are over ten percent cheaper than the average of the last 15 years.

But: “The valuations should rise again in the coming weeks, however, because the analysts are likely to further lower their profit estimates due to the coronavirus pandemic. The markets are currently not pricing in a drop in profits in the current year, ”emphasizes the stock exchange expert.

According to the chief strategist at DZ Bank Christian Kahler, share prices in a recession in the past mostly fell below the book value of the company. The book value of the Dax is currently around 8100 points. “It is therefore quite conceivable that the stock markets will continue to reset in the coming weeks and only find their low in the range, converted to the Dax, between 8000 and 9000 points in April or May.”

ECB chief economist clarifies Lagarde statements

There was news from the European central bank: Philip Lane, chief economist of the ECB, made a blog entry on the central bank’s homepage on Friday that he and his colleagues on the Governing Council wanted to continue to intervene in the turmoil in the government bond market.

This clarification was necessary because ECB President Christine Lagarde had raised the risk premiums of Italian government bonds with an awkward statement the day before. She corrected herself afterwards in an interview with the US broadcaster CNBC, but this did not calm the markets consistently.

The short summary: The ECB makes targeted purchases to absorb high risk premiums in panic situations – for example, bonds from certain countries. That was exactly what Lagarde had denied the day before during the ECB meeting.

Lane also made it clear that in such cases the ECB can deviate from the so-called capital key, i.e. the weighting of purchases according to the economic size and population of the euro area countries. The only decisive factor is that these proportions are preserved in the total portfolio of bonds – including those from previous purchases.

Lane returns to an earlier interpretation of the rules. A statement by Lagarde, on the other hand, could at least be understood as if the additional purchase program of 120 billion euros decided on Thursday should be balanced by the end of the year. The chief economist also believes that future ECB rate cuts are possible.

Price falls in comparison

The Dax is currently experiencing the fastest crash in its history, so it’s worthwhile for investors to look at the previous crashes. The comparison with the financial crisis is particularly worthwhile because, in both 2008 and 2020, share prices had risen faster for years than the companies were able to increase their profits.

Since the Dax is a performance index that includes dividends, the chart of the Dax price index offers better support without dividends.

The comparison: the price index reached its high of 5282 at the end of 2007, after which it fell by more than 55 percent to 2258 points. Transferred to the current situation, this stock market barometer has further downside potential without dividends. So far, the minus is “only” around 32 percent.

The price index has so far dropped from 6136 points to 4062 points. In contrast to the financial crisis, what has been completely missing so far are intermediate recovery phases. The current trading day meant at least a slight recovery.

Focus on bank stocks

And like in the financial crisis, investors should keep an eye on banks’ prices. Because since the beginning of the year, the Stoxx 600 banks has collapsed more than a third. The shares slipped from yesterday on Thursday Commerzbank and Deutsche Bank hit new record lows.

This Friday, however, the trend is to relax again: Deutsche Bank shares peaked at more than 18 percent, and Commerzbank stocks have even increased by up to 19.67 percent in the meantime. Later, however, the two bank papers fell sharply again and closed around four percent firmer.

A worrying fact is that in the past few days the Credit default swaps (CDS) have skyrocketed in price: Today, they signal an increasing likelihood that the capital cushion built up over the past few years will not be sufficient to bring all banks through a potentially drastic corona crisis without a capital squeeze.

View of Italy and Spain

On two southern European stock exchanges, bans against a crash continuation. In response to the sharp drop in share prices, Italy’s financial market regulator Consob has banned short sales of 85 companies’ shares after prices on the Milan Stock Exchange plummeted 17 percent. This affects above all the bank titles. The ban applies to this Friday.

Short sales of 69 shares were also banned in Spain to prevent the mass sales of these companies’ securities. The ban applies to all paper that yielded more than ten percent on Thursday and all illiquid stocks that fell by more than 20 percent. The Spanish stock market index IBEX fell over 14 percent on Thursday, the largest loss ever measured in one day.

The German Stock Exchange does not want to impose a short sale ban despite the turbulence on the stock markets. One does not take such a step, said a group spokesman on Friday. After the collapse of the stock markets on Thursday, speculation had arisen that short sales could also be prohibited in Germany.

With short sales, investors bet on a drop in the price of a share. In doing so, they sell securities that they borrow beforehand for a fee. If the price drops by the return date, they can stock up on the titles more cheaply and cross in the difference. On the other hand, if the price rises, the short sellers are at risk of loss.

Consequences of the corona virus: This is how long a recession could last

Look at the individual values

Wirecard: The company has published a preliminary version of the KPMG special audit, which is intended to clarify the numerous allegations that the group has faced in recent months. As of now, however, this only provides limited information about the accounting methods Wirecard. The stock had lost 17.9 percent yesterday, today it was up almost 30 percent at the start of trading. However, Wirecard went out of business with an increase in value of only 4.47 percent.

Roche: The FDA passed a test by the Swiss pharmaceutical company Roche temporarily approved for the detection of the Sars-CoV-2 virus as part of an emergency determination. Roche wants to push its capacity limits so that millions of tests can be made available to hospitals and laboratories in the United States and, in some cases, in Europe. A single test system delivers results of up to 4128 samples within 24 hours. The share tops the German stock market by more than eleven percent, but it only went up slightly by 3.15 percent from trading.

Dräger: The Lübeck medical technology group Drägerwerk has received a major order from the federal government to supply 10,000 ventilators. The processing of the order will extend over the whole year, said Dräger on Friday with. In response to the spread of the corona virus, the federal government announced on Thursday evening that it would significantly expand ventilation capacity in Germany.

“This is the largest order we have ever had,” said a Dräger spokesman. “We have to expand capacities.” It is very unusual for a government to order directly from the company. Hospitals and clinics are usually the customers. At the close of trading, Dräger paper was up 16.1 percent at EUR 58.05.

What the chart technique says

In the past 16 trading days, the German stock index has dropped 14 times with a minus. The stock barometer is still far from stabilizing. Chart technology and fundamental reasons are currently irrelevant to investors.

Gregor Bauer, independent portfolio manager and chairman of the Association of Technical Analysts in Germany, says: “This is a sign of panic, as is the phenomenon that investors hardly differentiate between industries or companies in their sales. There is no end in sight to the sell-off. “

In terms of charts, we have a bear market as the major indices are now more than 20 percent below their all-time highs. In crisis mode, the low of February 2016 at 8,699 points defines the next line of retreat. To take the most pressure off the Dax, you need at least one trading day without a new low or, like today, at least one day with a slight plus sign.

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.

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