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Symbolism on the stock exchange:
In the jargon, financial market optimists are referred to as "bulls", while pessimists are referred to as "bears".
Photo: Frank Rumpenhorst/dpa
It looks tempting - but it's risky: the stock market has apparently already recovered from its crash after the Russian attack on Ukraine.
After slipping by more than 20 percent at times, prices are now almost back to the level they were before the start of the war.
But anyone who gets in now is taking a very high risk.
There are always recovery phases in falling markets, they are also referred to in technical jargon as "bull traps".
So the question is: will the stock market recovery last?
Or is it a classic "bull trap," meaning stock prices could drop again soon?
A look at the longer period of time might help.
Shortly before the attack, the Dax was listed at just over 14,500 points, only to drop by more than 1,600 points to less than 12,900 points within a few days.
Currently, however, the Dax has made it back up to well over 14,000 points.
Dax is in the "bear market"
From a distance, however, it is clear that the Dax is still well below its record high of almost 16,300 points, which it reached in early January.
At the beginning of March, at the low of the Ukraine crash, the gap to this high was even more than 20 percent - that was the moment when the Dax was officially in a "bear market" according to the usual definition.
In addition: Real reasons for the interim recovery on the stock market are difficult to identify.
Russia's war against Ukraine is still in full swing, and few can currently say when and how the dispute will end.
The economic consequences are therefore hardly foreseeable.
The only thing that seems certain is that not only the Russian economy, which is affected by sanctions from the West and the withdrawal of numerous international corporations from the country, will suffer.
There will also be losses in the West, especially in the European Union including Germany.
Numerous economic researchers have therefore already corrected their growth forecasts downwards.
Expensive energy, high inflation, rising interest rates
This week, for example, the Munich Ifo Institute announced that it only expects gross domestic product (GDP) growth of 2.2 to 3.1 percent in 2022.
In view of the overall situation, that sounds comparatively optimistic, but in December the institute had still assumed a GDP increase in gross domestic product (GDP) of 3.7 percent.
The Russian attack is dampening the economy "through significantly higher raw material prices, the sanctions, increasing supply bottlenecks for raw materials and intermediate products and increased economic uncertainty," according to the Ifo researchers.
The Banking Association (BdB) also only expects economic growth of 2.2 percent in the current year, as it also announced this week.
But only "if the war in Ukraine hopefully doesn't escalate any further," says BdB chief executive
Christian Ossig
.
There is a whole series of stress and uncertainty factors for the economy that are by no means exclusively related to the war in Ukraine and that investors on the stock exchange should also keep an eye on:
High energy prices:
Even before the war broke out, the prices for electricity, gas, fuel and the like had skyrocketed in some cases.
Much of the West's conflict with Russia also revolves around energy.
After all, Russia is one of the largest suppliers of oil, natural gas and hard coal on the world markets.
The US has already passed an embargo on oil and gas supplies from Russia, and this is still being discussed in the EU.
Most recently, Chancellor
Olaf Scholz
said this week that Germany also wants to end its energy dependency on Russia, but not in the short term, but rather in the long term.
Russian President
Vladimir Putin
on the other hand, caused a stir with the announcement that in future only rubles would be accepted as payment for Russian gas supplies.
In short: The energy supply remains hotly contested - so there is little to be expected for the time being with relaxation and falling prices.
It is not for nothing that oil prices have been at an extremely high level for weeks.
High inflation rates:
General price increases were also a dominant theme in the economy and on the stock market in Ukraine even before the war.
And that is unlikely to change – on the contrary.
The best evidence is the wheat prices, which have skyrocketed since the beginning of the war because the conflicting parties Russia and Ukraine are among the most important wheat suppliers in the world.
In any case, the Ifo Institute expects inflation to increase faster than previously expected.
Instead of an inflation rate of 3.3 percent, the Ifo researchers now expect 5.1 to 6.1 percent in the current year.
The Kiel Institute for the World Economy (IfW) and the Leibniz Institutes for Economic Research in Essen (RWI) and Halle (IWH) have already revised their forecasts for inflation upwards.
Rising interest rates:
The interest rate policy of the central banks in particular is viewed with suspicion on the stock exchange.
The rising inflation rates have already prompted the first measures by the central bankers and a general rise in interest rates.
The war in Ukraine with its economic effects is also driving this development.
In any case, US Federal Reserve Chairman
Jerome Powell
already signaled a few days ago that he intends to raise interest rates even more than previously planned if necessary.
This could put additional pressure on the stock markets, as rising interest rates slow down economic growth and make interest-bearing investments more attractive than stocks.
Supply shortages:
In any case, the global economy has been groaning under logistics problems and supply bottlenecks in various areas for months, above all in the market for semiconductor chips.
The conflict in Ukraine has exacerbated these problems.
The auto parts supplier Leoni, for example, produces wiring harnesses in a country at war that are processed by German manufacturers.
These parts failed at times, which is why car production in this country faltered.
In the meantime, Leoni has partially restarted production in the Ukraine.
The outgoing Infineon boss
Reinhard Ploss
In view of the war, recently warned of the danger that new bottlenecks could arise.
For example, Ukraine is an important supplier of the noble gas neon, which is used for chip production.
The new Infineon CEO Jochen Hanebeck has strengthening the supply chain at the top of his agenda.
Against this background, it is not surprising that many investment professionals are skeptical about the recent recovery in the stock market.
"The likelihood of a correction has increased after the two-week strong recovery," says
Dieter Helmle
, CEO of Frankfurt-based asset manager Source One Alpha.
"We expect this recovery to be only temporary,"
agrees Adrian Roestel
, Head of Portfolio Management at Huber, Reuss & Colleagues in Munich.
"Uncertainty about a war that will drag on for months, what we think is a likely tightening of sanctions against Russia, the monetary policy response in the industrialized countries and the heavy losses on the bond markets suggest that we will see renewed losses in the equity markets."
And
Markus Schultes
, portfolio manager at the investment company Unikat in Mannheim, warns: "It is already very risky to assume that the markets will actually recover. The potential for further escalation is too great. Even if you want a quick recovery, like after the outbreak of Corona in April 2020 the past has taught us that wars can often hold the markets under their spell for months and years."
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Rising prices, less growth:
LOIM portfolio manager
Laurent Joué
warns of the "stagflation shock"
Above all, one possible scenario of future economic development is worrying observers: so-called stagflation.
What is meant is the coincidence of faltering economic growth with high inflation – a fatal mix from which national economies find it difficult to find a way out.
In view of the sharp rise in energy and commodity prices and falling growth forecasts, the investment world must acknowledge the fact "that we are dealing with a stagflation shock," writes
Laurent Joué
, portfolio manager at Lombard Odier Investment Managers (LOIM), in a market assessment.
The risk now is that this shock will turn into a permanent phenomenon.
"Inflationary pressure remains high," warns
David Ross
, fund manager at investment firm LFDE.
"At the same time, the risks are increasing that we will experience a recession in the middle of next year."
Maik Bolsmann
, managing director at asset manager B&K in Cologne, also hears the calls for stagflation from all sides.
In his opinion, however, it is far from certain that it will come to that.
Instead, Bolsmann draws attention to those indicators that investors should keep in mind first and foremost when they look at companies and think about an investment: sales and, above all, profits.
"The reporting season at the beginning of the second quarter will be decisive," says the investment professional.
"Here you can see how severe the skid marks in the western economy were due to the acts of war. In addition, the company leaders will give trend-setting outlooks for the coming months."
There may not be much reason for optimism, however.
Because the economic consequences of the war are likely to be reflected in the balance sheets of many corporations - and in their outlook.
Martin Stötzel
from Rhein Asset Management in Düsseldorf even expects a real "profit recession" for many DAX companies in the coming quarters.
All in all, a potpourri of risks and imponderables.
Anyone who, in view of the recent price recovery, believes that the market turbulence caused by the war is over is very likely to be mistaken.
Overall, there is much to be said for further price setbacks.
For investors, this means: If you have a particularly long investment horizon, you can probably use the current price level to get started.
Everyone else, on the other hand, should be very careful.
