DAX Rally

Germany's Teflon Stock Index

bull market frankfurt stock exchange june 2014 source dpa
German equities are up by about 15 percent on average this year, and most analysts expect the stock market to go higher during the DAX bull summer.
  • Why it matters

    Why it matters

    German blue chip shares could offer attractive returns at a time of record-low interest rates.

  • Facts

    Facts

    • The DAX, an index of Germany’s 30 leading blue-chip companies, has already climbed 15 percent this year.
    • Experts warn that there could be considerable volatility ahead.
    • China’s flagging growth has weighed on German stocks.
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    Audio

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Germany’s benchmark DAX stock index would appear to be made out of Teflon: it was barely hit this week by the stock market crash in Greece. Last week, even plummeting prices in China had little impact.

There’s no trace of crisis in Germany’s financial capital, Frankfurt. On the contrary, 2015 could be a good year for German equities. The DAX, an index of Germany’s 30 leading blue-chip companies, has already climbed 15 percent and could surge higher in the coming months, according to the latest forecasts by equities analysts evaluated by Handelsblatt.

Many stock strategists have raised their targets for German large caps: Private banks Hauck & Aufhäuser and Bankhaus Lampe are the most optimistic, seeing the DAX at near 12,100 points by year’s end. That would be an increase of around 4.5 percent from current levels of 11,580.

“We haven’t seen the top of the stock cycle yet,” said Ralf Zimmermann, an equities strategist at Düsseldorf-based Bankhaus Lampe, who raised his yearly DAX forecast from 11,000 points in June.

Such optimism is surprising considering the dangers lurking in the financial markets: China’s flagging growth, Greece’s festering euro and bankruptcy crisis and the U.S. Federal Reserve’s impending interest-rate hike could all spoil the stock market party.

So is the optimism unfounded?

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