discount dax

Germany’s Bargain Blue Chips

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, February 19, 2016.     REUTERS/Staff/Remote
Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt.
  • Why it matters

    Why it matters

    The global share sell-off has hit German stocks particularly hard, and some are now bargains for potential predators.

  • Facts

    Facts

    • Investors are withdrawing capital from Germany faster than from any other highly developed industrial economy.
    • One in five firms listed in Germany’s four main stock market indices now costs less than the value of its equity capital.
    • Deutsche Bank, VW, E.ON and RWE are real bargains, but are beset by problems that are deterring potential predators.
  • Audio

    Audio

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For anyone banking on globalization, German companies were a safe bet for many years because they sold more than two thirds of their products abroad.

But since the start of the year, that reliance on exports has become a millstone. Markets are speculating that the Chinese boom is coming to an end, that growth will slow and the global economy is about to enter a period of trade barriers and nationalist retrenchment as espoused by populist parties around Europe and presidential candidates like Donald Trump.

As a result, investors are withdrawing capital from Germany faster than from any other highly developed industrial economy. Germany’s DAX index has lost 12 percent since the start of the year, wiping €150 billion, or $163 billion, off the value of the leading stocks it contains.

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