The corona crash destroyed 19 trillion euros on the stock exchange

Bull and bear in front of the Frankfurt stock exchange

Historically unique losses in global equity markets.

(Photo: Oliver Ruether / laif)

Dusseldorf The money could be used to repay all of Europe’s public debt, and there would still be five trillion euros left: the 50,805 listed companies worldwide lost 19.4 trillion euros in just six weeks, according to Handelsblatt calculations. In such a short time, this decline is historically unique.

The courses worldwide lost 24 percent, in Germany the 755 listed companies were hit even harder with a loss of almost 30 percent. All local companies together currently cost 1.4 trillion euros. Alone Apple and Microsoft reach a total market value of 1.95 trillion euros.

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Some winners in a desolate quarter

Dhe view from your own four walls is not bad at the moment: bright blue sky, sunny, the meadows – if you can see them – green. For stock marketers, investors or fund managers, on the other hand, the displays on the home screens flash red. Green numbers, which stand for rising prices, have been seen less frequently lately. Within a very short time, the wind on the stock exchanges has turned strongly and caused the greatest turbulence since the financial crisis. For the American stock exchanges, the first three months of 2020 even caused declines that had never been seen in a first quarter.

Antonia Mannweiler

In Germany, the Dax was still at 13,250 points at the beginning of the year. By the end of the first quarter, the leading German index had lost more than 3,600 points, which represents a loss of more than 27 percent. In good stock market times, there are winners and losers in the Dax. But if you look at the Dax values ​​of the past three months, you will see many losers and discover some that have lost less.

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What investors should know about the online AGM

Shareholders’ meeting

Lone shareholder: First companies are considering an online AGM because of Corona.

(Photo: imago / Sven Simon)

Frankfurt It is an unexpected premiere. For decades it had been stipulated by law that general meetings in Germany are face-to-face events. But the corona virus has now wiped that certainty off the table. Already in April a law should allow virtual general meetings in Germany this year without attendance.

This will enable managers to carry out dividend resolutions and supervisory board elections despite restrictions on meetings. The first practical tests could already take place at the general meetings at the end of April the DaxCorporations Bayer and Munich Re respectively. This step means new territory not only for companies, but also for many shareholders.

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Dax closes almost two percent

Up and down the Dax: “We have to die a stability death”

Dusseldorf After significant price fluctuations in the previous week, the German stock market started the new trading week comparatively successfully. The Dax closed Monday 1.9 percent increase at 9816 points.

In the previous week, the leading German index had the best weekly balance since December 2011: Despite price losses on Friday (3.7 percent in the red), the Dax had gained 7.9 percent.

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Dax current: Dax continues to slide

Dusseldorf The German stock market is starting the new trading week weakly. Of the Dax in the first hour of trading, it is down one percent at 9,537 points.

Nevertheless, the German stock market could face a turbulent week of trading. Because hedge funds like Bridgewater, which played a significant part in the high price gains at the beginning of last week, have resolved most of their speculations. (Read here: How Ray Dalio made profits in the Dax).

Especially since the guidelines are bad: The US indices have slipped significantly in the last hours of trading. And the Asian stock market barometers are also starting the new trading week with losses.

Which does not exactly speak for further rising prices: Many DAX companies are considering reducing their dividend or canceling it entirely. For shareholders and the Dax prospects, dividend cuts and, above all, the uncertainty about it are bad news.

Companies have never canceled the dividends proposed by the Board of Management and the Supervisory Board, not even during the financial crisis in 2009, the largest recession in German post-war history. With the annual distributions, more could be earned in the long run than with price increases.

We can only hope that the extremely negative scenario of asset manager Markus Schön will not come true. He predicted a new “Black Monday” on the stock markets on Friday. “The Dax could drop below 9,000 points again next week and the Dow Jones could drop below 20,000 points,” he said on Friday.

One could dismiss this view as scaremongering. However, Schön was often right with his forecasts: when the Dax was still trading at 13,000 points at the end of February, he saw a quick slide below the 12,000 count mark. On March 9, he forecast a Dax level of 9,400 points. At that time, the index was still around 11,000 points.

The key economic indicator will be released today at eleven o’clock on Monday. It is the European business climate index. After the collapse of the Ifo index, which reflects the mood in the German executive floors, experts expect a similarly sharp decline across Europe. The publication of the info index had led to a quick sellout at the Dax a week ago.

Look at other asset classes

The EU’s refusal to issue common bonds, has little impact on the market. The yield spread between Italian and German government bonds increases only slightly from 1.78 to 1.84 percentage points. The yield on Italian bonds is 1.35 percent, that of German bonds at minus 0.490.

President Ursula von der Leyen has made it clear that the EU Commission is not planning to issue its own bonds to raise debt in the Corona crisis. Italy, along with Spain, France and other countries, is calling for joint EU borrowing. In Germany in particular, the Greens support this vehemently. Chancellor Angela Merkel and other EU heads of government reject corona bonds because they fear liability for the debts of financially troubled countries.

The fear of falling demand due to the coronavirus crisis sends the Oil price plummets again. The Brent variety from the North Sea slipped by up to 7.6 percent on Monday and, at $ 23.03 a barrel (159 liters), was as cheap as it was last more than 17 years ago. The US oil WTI fell at a similar price and was trading at $ 19.92, just above its 18-year low from last week.

In addition to the extensive standstill of the global economy, crude oil is suffering from the price war in Saudi Arabia and Russia, which, despite lower demand, turn the oil tap on to the stop. Experts expect crude oil demand to drop by around 20 percent due to the pandemic.

Because of the corona virus pandemic Investors again flee into the world’s leading currency. The dollar index, which reflects the price of major currencies, rose 0.3 percent on Monday to 98.674 points. In return, the euro is cheaper by 0.5 percent to $ 1.1086.

Look at the individual values

MTU: The company has now canceled the dividend and forecast for 2020 in the past few days. No wonder investors are buying the papers from MTU sell, which is at the start six percent in the red.

Vonovia: The largest German apartment rental company postpones its general meeting until the end of June and, unlike many banks, wants to pay a dividend. In order to be able to hold a general meeting, the shareholders’ meeting will be set to June 30, 2020 Vonovia With. The event should have been on May 13th. As previously planned, Vonovia will pay the shareholders a dividend of EUR 1.57 per share. This announcement pleases the shareholders, but the share price falls by 0.7 percent.

Easyjet: The British low-cost airline has suspended flight operations indefinitely due to travel restrictions to combat the corona virus. In order to keep the impact on the balance sheet as low as possible, costs would be reduced. The news was no longer a surprise: the share rose by 2.9 percent in German retail.

Indus Holding: After a decline in profits in the previous year, the investment company expects a drop in earnings as a result of the Corona pandemic 2020. With sales of 1.5 to 1.65 (previous year: 1.74) billion euros, the Management Board is aiming for an operating result (EBIT) of 85 to 95 (135.2) million euros. Although, according to the company, the forecast “takes into account the currently foreseeable consequences of the corona pandemic, it is associated with a high degree of uncertainty”, which causes the title to lose 0.9 percent.

What the chart technique says

The past two trading days have been a comfort. The respective price fluctuations remain within the daily high and low of last Wednesday. Experts speak of an “inside day”.
With the increase to 10,137 points on Wednesday last Wednesday, two resistances on the upper side are now of great importance: Firstly, the downward price gap of March 12, which covers the range between 10,138 and 10,391 points; on the other hand the low of December 2018 with 10,279 points, the starting signal for the rally until mid-February 2020.

“This is the decisive hurdle in chart technology, the skipping of which would put the German standard values ​​on a quick recovery path,” say the technical analysts at Düsseldorfer Bank HSBC. Without a recapture, the coming trading days are likely to remain volatile.

Such downward price gaps arise when the daily low of the previous day is above the daily high of the subsequent trading day. The daily low of March 11 was 10,391 points, the high of the following trading day was 10,138 points. Such gaps are a quick re-evaluation of the market and therefore an important resistance according to chart technology.

On the underside, according to the HSBC, the Dax should return to crisis mode at prices below 9070 points.

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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These are the considerations of the Dax companies

Dusseldorf Germany’s companies wanted to transfer a dividend of over 45 billion euros to their shareholders after this year’s Annual General Meetings. Actually. The total is calculated from the corresponding proposals of the groups in their business deals for the past year and the annual press conferences.

But after Dax– Newbie MTU has announced that, given the corona pandemic, it is unlikely that a dividend will be distributed, “the ice has broken”, fears Commerzbank-Expert Andreas Hürkamp. The engine manufacturer originally wanted to distribute 3.40 euros per share, 55 cents more than in the previous year.

According to MTU, many companies are now rethinking their previously announced dividends. Covestro for example, plans to continue paying a dividend of EUR 2.40 per share, but a spokesman for the group restricts the Handelsblatt: “We will continue to monitor economic developments closely and, if necessary, take them into account in our dividend proposal.”

Express themselves similarly BASF and Volkswagen. With 3.3 billion euros, the car maker would be the largest payer after the alliance. On the other hand, the pharmaceutical giant Bayer announced on Friday that it would transfer EUR 2.80 per share at its purely digital general meeting on April 28, as planned.

For shareholders and the Dax prospects, dividend cuts and, above all, the uncertainty about it are bad news. Companies have never canceled the dividends proposed by the Board of Management and the Supervisory Board, not even during the financial crisis in 2009, the largest recession in German post-war history. Many stocks are held primarily because of high and reliable dividends. With the annual distributions, more could be earned in the long run than with price increases.

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So it remains to be seen how companies will deal with the issue of dividends at the annual general meetings, which will probably be made up for in the second half of the year after the cancellations. With the announced 45 billion euros, for example, the crisis-shaken one Lufthansa buy almost ten times.

Twelve German companies have promised their shareholders more than one billion euros in dividends, most of all Allianz with four billion euros, Volkswagen with 3.3 and Siemens with 3.1 million. But in the face of the global crisis, are the promises actually kept?

“MTU is the icebreaker with a view to further deletions,” assumes Andreas Hürkamp from Commerzbank. The strategist has been pursuing corporate dividend policies for decades. There has never been a comparable situation in which companies have canceled dividends that have already been announced – not even in shock after the bankruptcy of the major American bank Lehman in 2008. With the cancellation, MTU would keep 177 million euros.

The approach of the Dax newcomer seems understandable given the massive loss of revenue this year, but is controversial. After all, the dividend is about the success or failure of the past financial year. There was no corona crisis yet.

Legally not clearly clarified

Jürgen Kurz from the German Association for the Protection of Securities (DSW) describes such a procedure as “legally difficult”. “After the approval of the consolidated financial statements by the Supervisory Board, the dividend proposal is also approved, and companies can no longer go back from such a decision,” Kurz argues, but adds: “The question is not legally clear.” He refers to legal opinions that are different the investor protection have previously caught up with.

In contrast, the lawyer Marc Löbbe from the renowned Frankfurt business law firm Schilling, Zutt & Anschütz grants the companies the right to make provisions with the dividend retained: “It is even permissible at the Annual General Meeting to propose a change to the original proposal for the appropriation of profits and thus the Bring in dividends, ”argues Löbbe. It is controversial among lawyers under what conditions this is possible.

The question is controversial, because nine out of ten German listed companies currently want to distribute dividends for the past financial year. You are now faced with the decision to stick to this in view of the good results in the past year or to cut the dividend due to collapsing earnings due to the corona crisis. “In the current environment, I expect the corporations to cut their dividends significantly,” predicts the chief investment strategist at German bank, Ulrich Stephan.

The focus is not on companies like Beiersdorf, handle, Deutsche Telekom and SAP. Your dividend seems certain because the business models are little to no crisis prone. Siemens and Infineon have been among the few companies that have already paid dividends because their fiscal year ended in late September. It’s about the many cyclical companies.

For days, analysts have been speculating on a dividend cut at the chemical companies BASF and Covestro as well as at the automaker Volkswagen. The general meetings, which have been postponed for almost all companies for an indefinite period – but still this year – fuel corresponding speculation. “The later the annual meetings take place, the more shareholders and management will focus on the current financial year,” says Commerzbank analyst Hürkamp.

graphic

“Covestro plans to continue paying a dividend of EUR 2.40 per share,” a group spokesman told the Handelsblatt, but at the same time restricts: “However, we will continue to monitor economic developments closely and, if necessary, take them into account in our dividend proposal.” There will only be a dividend proposal at the – postponed – general meeting.

BASF also keeps all options open. “Not so far,” answers a corporate spokesman when asked whether there are any plans to change the announced dividend of EUR 3.30 per share – and he adds: “In principle, such a proposal can also be changed at the Annual General Meeting. ”

At BASF, that would be like breaking a taboo. Shortly after taking office, CEO Martin Brudermüller put himself under pressure and announced that he would like to increase the payout every year in the future. The maxim among his predecessors was: pay more in good times and keep the dividend in bad years if possible. A cut of just ten cents would mean a dividend at BASF “only” at the previous year’s level – which would have broken the new boss’s first promise to shareholders.

Volkswagen is in a tricky situation. In view of the high after-tax profit of 14 billion euros, the world’s largest car maker has increased its dividend significantly from 4.86 to 6.56 euros per preferred share. Even so, the payout ratio calculated from the net profit is only 24.5 percent. 40 to 50 percent are common internationally.
Even more: “We are still below our strategic target for a payout ratio of more than 30 percent,” says a VW Group spokesman.

Car maker considerations

So there is a lot of buffer. Nevertheless, Volkswagen is also considering reflecting on the decision again: “The decision on the dividend will be made at the 2020 Annual General Meeting. Until then, we will closely monitor the further development of the corona crisis. ”The competitor BMW intends to distribute 2.50 euros per share as planned, one euro less than in the previous year. “There is currently no intention to change anything in these plans,” it says on request. However, the Munich-based company also leaves the decision open.

Is only a little more solid Daimler to his promise. “Our proposal for a dividend has been made and there is no reason to change anything at this point,” said Daimler CEO Ola Källenius. Which means something like: Tomorrow everything can look different. There would not be much to cut at Daimler anyway, after the Stuttgart company had announced in Europe before the corona crisis that it would cut its payout from 3.25 euros to 90 cents.

In particular, companies that are considering taking government aid during the crisis are likely to be forced to cut their dividends. This applies, for example, to the automotive supplier Leoni. Lufthansa also talks to the state development bank KfW about possible aid, which has not yet been necessary. Both Lufthansa and Leoni canceled their dividends.

The banks have been in the focus of dividends since the end of last week. So far, the crisis has hardly spread to the financial industry. But the public sector does not want to have to step in again after the banks have distributed billions of dollars. It was like that a decade ago. “We advise financial institutions to handle existing capital resources very carefully,” said Felix Hufeld, president of Bafin financial supervision. He advises banks to carefully consider dividends, profits and bonuses.

Deutsche Bank need not think about this. She has no intention of spilling anything anyway. So far, Commerzbank intends to pay a dividend of 15 cents per share. Given the state share of just over 15 percent that resulted from the financial crisis a good decade ago, anything but a deletion would be surprising.

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From a business point of view, a dividend waiver makes sense given the large drop in earnings, even though the companies have financial cushion. The equity capital of the Dax groups rose by almost four percent to 656 billion euros in the course of the past financial year. This corresponds to a solid average equity ratio of 34.5 percent. With the exception of the provider Eonwho, however, does not have to fear any losses in view of the corona crisis, all other groups have a quota above the critical mark of 20 percent.

Operating cash flow, i.e. the cash generated from its business activities, also grew by a good 11 percent to EUR 142.8 billion within one year. Volkswagen amassed the most cash flow with 30.7 billion euros, followed by Deutsche Telekom with 23 and Daimler with 13 billion euros.

However, liquidity is quickly lost if, during the crisis, income suddenly runs dry and costs remain the same. The companies experienced this at the turn of 2008/09. This time, the standstill in the economy is much bigger. “Many companies are likely to increase their debt in the form of new loans in the coming months. In the medium term, we also expect capital increases to strengthen equity, ”predicts DZ Bank expert Christian Kahler. This certainly includes withholding dividends to limit cash outflows.

More: Company lawyer Marc Löbbe considers dividend cuts to be a tried and tested means of maintaining liquidity.

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Distributions for shareholders: the Dax is hardly worth anything without a dividend

Shares like Bayer, BASF, Daimler, Siemens are valued by many investors for their high dividends. But now the skeptics could be right. .

Dax current: US stock markets boost Dax – closing price is just over 10,000 points

For the third day in a row, the leading German index ended trading in positive territory. The main reasons for this can be found on Wall Street. .

Dax current: Dax turns positive after initial losses – gambler brings major bank ABN Amro loss of millions

The German stock market remains in a difficult position. New details from the European Central Bank also have a significant impact on bond yields. .

Current Dax rate: Dax is slipping

Dusseldorf The price gains of the past two trading days have evaporated again. The Dax loses 2.2 percent in morning trading and stands at 9654 points.

The course of trading on Wednesday yesterday showed the typical behavior of a bear market: negative reports lead to a quick sell-out. An extremely weak Ifo index ensured that the Dax slipped by 650 points within a short period of time. By definition, the leading German index has been in a bear market since mid-March because it slipped more than 20 percent from its record high (13,795 points) in mid-February – this was the case at around 11,000 points.

The fact that the Dax went off the market on Wednesday after a final spurt of plus 1.8 percent and 9874 points was also due to profits on the US stock exchanges. The Asian stock exchanges were already weaker.

The behavior showed a similar behavior as on Wednesday German stock market even before the stock exchange opened. The pre-market indicators slipped significantly after GfK market researchers published consumer sentiment for Germany. The virus crisis is depressing sentiment to the lowest level since the global financial crisis. According to GfK, consumers see “very difficult times” coming up economically for Germany. “Hard times will come for the trade as a whole,” concludes GfK.

And today it stands Publication of another important economic barometer step, a long-ignored stepchild in the market: It is the weekly initial applications for US unemployment benefits. These were neglected for a long time because in the past few years there was almost full employment in the USA. According to the CommerzbankAnalysts are likely to see applications increase to around three million for the week ending March 21, a 10-fold increase over the previous week. This is unlikely to support the stock markets.

So there is a lot to be said that this bear market in this country with all its consequences is likely to continue over a longer period of time. According to the Frankfurt Stock Exchange, the behavioral economist Joachim Goldberg expects only “rallies within the bear market” in the future, ie only interim price gains within a longer-term downward trend.

His reasoning: Both the “bears” that are betting on falling prices and the bulls that expect price gains have not separated from their commitments in the past few days. The profits with their purchased long and short products are apparently not enough for them. So there must be even larger price movements for one side or the other to sell.

Which naturally leads to the question: If the Dax has to fall below 8000 points, so that there are sustainable course gains again?

“Long-term capital inflows would be necessary for the Dax to get out of the worst,” says Goldberg. “And they only come when the conviction prevails that the corona pandemic has survived to some extent.”

Minus 26.23 percent, that’s how much the 30 DAX values ​​have lost in the past 20 days, as of Wednesday. The analysts at Landesbank Helaba calculated this. They best dressed Beiersdorf-Titles with a minus of 5.93 percent from the affair. The biggest loss was in the papers of MTU accept with a minus of 50.17 percent.

Look at other asset classes

New details on European Central Bank (ECB) bond purchase program influence the bond markets significantly. Now many restrictions no longer apply. The ECB can now buy more than a third of a country’s outstanding bonds. There may also be major deviations from the capital key to help countries particularly affected. In the future, bonds with a term of less than 70 days can also be bought.

Italian bonds with a maturity of two years benefited the most, with yields falling to 0.384 percent. At the start of trading this figure was still 0.8 percent, in the past week it was still over two percent. The yield on ten-year Italian bonds fell to 1.49 percent.

The Italian bond rally spread to other peripheral markets such as Portugal and Greece. The respective figures also fell significantly across the board.

In comparison, yields on the European core markets for government bonds such as Germany and France fell only slightly. The value for ten-year German government bonds fell to minus 0.3 percent.

Oil prices are slipping significantly again on Thursday. North Sea Brent dropped 1.3 percent to $ 27.02 a barrel, US WTI even fell 2.3 percent to $ 23.94. The prices of both varieties have already slipped by around 60 percent this year.

Given the rapidly shrinking demand and rising production, the outlook for oil prices remains negative. Estimated global oil demand will decline more than 14 million barrels a day in the second quarter, which should result in unprecedented inventory build-up.

Look at the individual values

Evotec: The shares lose 4.1 percent. The drug developer expects further strong organic growth in 2020. However, it is not yet possible to precisely quantify the effects of the corona crisis.

Deutz: In view of the corona pandemic, the engine manufacturer is suspending its forecast for the current year and shutting down large parts of its production from April 1, initially until April 17. The share declines by around three percent.

SMA: By contrast, the shares of SMA Solar. Despite the corona pandemic, the solar technology group is sticking to its annual forecast and expects an increase in sales and profits.

ABN Amro: Incredible, but true – gamble by a single customer in the United States has brought the Dutch bank a loss of $ 200 million. This will affect the results of the first quarter, said ABN Amro With. The customer had speculated with warrants and futures, the positions are now closed. Because many investors are probably wondering what the security of the trading systems is like, the share falls by 3.8 percent, making it the biggest loser in the European banking index.

Pfeiffer Vacuum: The vacuum pump manufacturer has collected its annual targets because of the corona crisis. According to the Management Board, the forecasts for 2020 with regard to sales growth, unchanged returns and investments in the order of magnitude between 40 and 60 million euros are invalid. He did not name new goals. The share loses 0.8 percent.

Cewe: Because of the uncertainties associated with the pandemic, the photo company has decided not to make a forecast. At the moment, the focus is on online orders and mailing. Nevertheless, the dividend is expected to rise for the eleventh time in a row, to 2.00 euros per share (from 1.95 euros previously). Investors acknowledge this with a plus of 0.5 percent.

Stock exchange expert in New York: “Nobody knows exactly how much the economy will collapse here”

What the chart technique says

Despite the price gains, the chart-technical picture does not yet give the all-clear. The Dax rose to 10,137 points on yesterday’s trading day. As a result, two resistances are gaining in importance: on the one hand, the downward price gap of March 12, which covers the range between 10,138 and 10,391 points; on the other hand the low of December 2018 with 10,279 points, the starting signal for the rally until mid-February 2020.

“This is the decisive hurdle in chart technology, the skipping of which would put the German standard values ​​on a quick recovery path,” say the technical analysts at Düsseldorfer Bank HSBC. Without a recapture, the coming trading days are likely to remain volatile.

Such downward price gaps arise when the daily low of the previous day is above the daily high of the subsequent trading day. The daily low of March 11 was 10,391 points, the high of the following trading day was 10,138 points. Such gaps are a quick re-evaluation of the market and therefore an important resistance according to chart technology.

On the underside, according to the HSBC, the Dax should return to crisis mode at prices below 9070 points.

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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