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Bull and Bear: The optimists were last in charge on the stock exchange
Photo: Frank Rumpenhorst / dpa
Weeks of truth - the phrase for the stock market reporting season sounds trite.
But these days it seems more appropriate than ever, especially in the local stock market.
Like its European counterpart, the EuroStoxx50, Germany's leading index, the Dax, has had a few very strong months.
In the midst of geopolitical tensions and the Ukraine war, energy crisis, inflation and fears of recession, the Dax has risen by almost 30 percent since the beginning of October.
The EuroStoxx50 managed a similar rally – while at the same time important indices, for example on Wall Street, performed significantly weaker.
Now the consolidated balance sheets and the business expectations presented at the same time by top management will show whether the outperformance was justified.
Or whether the companies are overvalued.
So far, only SAP and Sartorius have presented their figures from the Dax40 – three other companies will follow this week: Deutsche Bank, Infineon and Siemens Healthineers;
the rest will follow in the weeks that follow, until the end of March, when RWE and Porsche SE close the deal.
So the weeks of truth.
A surprisingly robust corporate world
There are various reasons for the extraordinary price gains of local companies.
The specter of inflation, for example, no longer terrifies investors so much;
Recently, the rate of price increases has already been declining.
Energy prices have leveled off again, as have freight rates for overseas transport.
Global supply chains have eased somewhat.
In addition, central banks such as the ECB or the US Fed are now convincing in their decisive action against inflation.
In addition, pessimists with fears of a recession had caused a bad mood throughout 2022 and thus pushed down share prices.
But many companies were able to convince with their business results again and again that they were able to cope well with inflation and the energy crisis.
The Federal Statistical Office recently confirmed this view: the bottom line is that the German economy grew by an impressive 1.8 percent last year, despite an estimated slight decline in the final quarter.
Economics Minister Robert Habeck
(53, Greens)
recently predicted that there would be no deep economic slump this year .
The worst scenarios have been prevented.
"In the past year, it was predicted practically every quarter that companies' profit margins could be hit by high costs," says
Sven Streibel
, chief equity strategist at DZ Bank.
"But the large German stock corporations were able to pass on the costs well, and profits have remained more than robust over the course of the year."
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"Recession priced out": Equity strategist
Sven Streibel
from DZ Bank observes the Dax rally with suspicion
Photo:
Dirk Moll / DZ Bank
It is true that German companies became noticeably more cautious about their prospects last year.
According to an analysis by the consulting company EY, the number of profit or sales warnings from companies from the Dax, the MDax and the SDax rose from 35 to 70 in the course of 2022 compared to the previous year seven to 18 up.
At the same time, however, local groups closed the past year strongly, which is also shown by the new dividend record: According to an analysis by DekaBank, the companies in the Dax distributed a total of 55 billion euros to their shareholders.
Including the MDax, the total is even 62.5 billion euros.
"Earned as much as never before"
"Despite the pandemic, which has led to considerable distortions in the production chains of the global economy, companies have come through the crises surprisingly well and have increased their earnings," summarizes
Joachim Schallmayer
, Head of Capital Markets and Strategy at DekaBank.
"The Dax companies made more money in 2022 than ever before."
No wonder that, against this background, the impression has spread over the past few weeks that Europe and Germany could still escape the recession that was already believed to be certain.
The end of the zero-Covid policy and the associated prospect of economic recovery in China, one of the most important sales markets for large local corporations, also provided hope in this direction.
German companies with a strong export base also benefit from positive economic signals from the USA.
All this together explains the strong price gains in the Dax and EuroStoxx50 in recent months.
But does it justify them?
In any case, the drop to which investors have heaved the most important German stock market index appears to be quite large.
Stock expert Streibel from the DZ Bank calculates: According to his calculation, a Dax level of 15,000 points already corresponds to an average growth in profits of the Dax companies of 10 percent in the current year.
However, analysts only expect a consensus of less than 2 percent in profits for the first German stock exchange league in 2023.
"At the current level of the Dax and Eurostoxx50, investors have practically priced out the recession," says Streibel.
"More than that: a profit increase of 10 percent has nothing to do with a normal stock market year. This is not just pricing out excessive pessimism, but already pricing in a positive economic shock. And we don't see that at the moment."
Consequence: It is very likely that a correction will have to be made in the near future.
So the earnings season that is just beginning could be a hot time for investors.
The insights from the US stock exchanges
In the USA, where the "earning season" traditionally starts earlier, some business results have already been published.
Large banks such as Goldman Sachs and JP Morgan, for example, reported falling profits a few days ago, but by and large remained within expectations.
This fits into the overall picture: Overall, more than two-thirds of the US companies that have already reported in the current cycle have met or exceeded expectations, says Streibel.
So far, there have largely been no major price slumps.
A special focus is traditionally on the tech industry, which dominates the US stock market with corporations such as Microsoft, Amazon and Apple.
A lot depends on the business results of the big players.
But even there the all-clear has been given so far: "Tech companies like Microsoft, which have already reported, are reporting some declines in profits, but these are usually within expectations or better," says Streibel.
Even the massive job cuts that the industry has announced in recent months is no cause for concern for the investment expert.
"Companies are mostly reducing overcapacities that they built up during the corona pandemic."
The company leaders have so far emphasized that the core business or the growth areas are hardly or not at all affected.
Not to forget: There were even positive outliers.
The carmaker Tesla, for example, reported record results last week and sent the long-stricken share soaring.
The lessons for Germany
A look at Wall Street is only of limited use as a guide for the local stock exchange.
After all, the US stock market has not risen as much as the European one in recent months.
So what's in store for the reporting season in this country?
Investment professionals express caution in view of the uncertain economic situation.
Many of them see high price risks in view of the sharp rise in share prices.
The market is not exactly well valued, says
Burkhard Weiss
, Managing Partner at Rhein Asset Management in Düsseldorf.
The cost pressure and the interest burden would lead to "separating the wheat from the chaff in this reporting season," says
Georgios Passameras
from GAP Vermögensverwaltung in Cologne.
And
Rainer Göritz
from B&K Vermögen, also in Cologne, expects "after the very positive start to the year again with significantly higher volatility in the course of the reporting season".
The good news, however, is that there will probably still be a little grace period for investors in this country.
The first Dax companies are already presenting their business results these days.
According to the DZ Bank expert Streibel, it will not be decisive for the Dax until mid-February.
"The upswing in prices over the past few months was primarily driven by cyclical stocks," he says.
"So from companies like Siemens, Allianz, Bayer, BASF, Telekom, Airbus, Mercedes."
According to Streibel, only when these companies publish their business results and outlook will it become clear whether the price increases of the past few weeks will last - or not.
When the Dax companies will publish their figures for 2022:
SAP
and
Sartorius
presented their balance sheets on January 26th.
Deutsche Bank:
February 2
Infineon:
February 2 (Results for the first quarter of the financial year 2023)
Siemens Healthineers
: February 2 (FY2023 Q1 results)
Linden:
February 7th
Qiagen:
February 7th
Siemens Energy
: February 7 (FY2023 Q1 results)
Deutsche Börse
: February 8th
Siemens:
February 9 (FY2023 Q1 results)
MTU:
February 14
Airbus:
February 16
Alliance:
February 17th
Mercedes-Benz:
February 17
Fresenius:
February 22
Fresenius Medical Care
: February 22
Deutsche Telekom:
February 23
HeidelbergCement:
February 23
Munich Re:
February 23
BASF:
February 24
Bayer:
February 28
Beiersdorf:
March 1st
Covestro:
March 2nd
Merck
: March 2
Henkel
: March 7th
Zalando:
March 7th
Adidas
: March 8th
Burning day:
March 8th
Continental:
March 8th
Symrise:
March 8th
Deutsche Post
: March 9th
Hannover Re:
9 March
Daimler Trucks:
March 10th
Porsche
: March 13
Volkswagen
: March 14
BMW
: March 15
On :
March 15th
Vonovia:
March 17
RWE
: March 21
Porsche Automobil Holding:
March 23
