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Why it is too early for a turnaround

This shows that the weakness on the international stock markets should continue in the near future. In the short term, the courses could show counter-reactions, for example if there are extensive fiscal measures by the states, according to a study by the DZ Bank. But the real risk is still unknown. The infection continues to spread and the economic dangers remain very high. “It will still be months before the actual impact on the companies and their profit development becomes visible,” states Christian Kahler, analyst at the cooperative central institute.

Daniel Schär, an expert at Weberbank, puts it even more dramatically: “We are in the middle of a wildly angry, historically unique storm that is sweeping over the economy and the financial markets.” Governments and central banks are doing everything to ensure that Limit the impact of the pandemic. However, the economy will slide into a recession. “The depth and duration of the recession depends on the length of the restrictions on public life that we have to accept in order to survive the pandemic.” It was only on Friday that many federal states decided on more extensive curfews for citizens. Many companies have already had to register short-time work.

However, many investment professionals believe that the major part of the losses could be recovered after the sharp price slide. Despite the recent recovery tendencies, the drop in the Dax since the all-time high in mid-February at 13,795 is still a good 35 percent. The financial experts justify that the worst crash is over with the fact that the leading German index has already fallen in the direction of its book value.

Put simply, the book value of a company results from the assets in the balance sheet minus the debts. It therefore shows the balance sheet equity. If the company’s share price falls below this value, it is considered undervalued on the stock exchange.

Market starts to bottom out

According to Andreas Hürkamp, ​​equity strategist at Commerzbank, the market will now try to find a floor. But that could take a long time. “The market may fluctuate around the book value for a year.” Hürkamp expects the analysts to reduce their profit expectations for the Dax companies by about 20 percent for the next twelve months. In this scenario, the Dax would stabilize at around 8700 points in the medium term.

However, this could prove to be too optimistic – given that the German carmakers, which have an important share in the leading German index, are temporarily stopping their production. According to Hürkamp, ​​slipping down to 7000 meters would be conceivable. Kahler from DZ Bank also points out that prices in a recession in the past often fell below book value.
On Friday, however, the Dax temporarily broke above the 9200 point mark and closed with an increase of 3.7 percent at 8929 points. On Wall Street, on the other hand, the Dow Jones index of standard values ​​went out of trading with a minus of 4.6 percent, the technology-heavy Nasdaq lost 3.8 percent. The nervousness of investors in the USA is mainly due to the increasingly severe cuts in public life. For example, all employees from irrelevant areas should stay at home in the state of New York.

US government plans helicopter money

The central banks and many governments around the world have already launched extensive measures to alleviate the consequences of the pandemic for the economy. The US Federal Reserve has already cut interest rates twice. America’s consumers are to be supported directly with so-called helicopter money. The European Central Bank announced a new $ 750 billion bond purchase program last week. On Friday, leading central banks also announced a coordinated campaign to secure the supply of money houses with cheap dollar loans in the virus crisis.

In Germany, the federal and state governments are also launching various rescue programs to support domestic companies during the corona crisis. The federal government is planning an additional budget of around 156 billion euros for this year. This is to be financed entirely through debts.

“Coordinated monetary and fiscal measures offer support to the companies and industries concerned, but they come too late to protect everyone. A slow economic recovery is only likely to occur in the fourth quarter, ”says Mark Haefele, chief investment strategist in UBS’s global wealth management. “The stock exchanges hate insecurity – so nothing is more important to them than first real clues as to when the virus can be brought under control to such an extent that normal economic life can be foreseen again,” says Robert Greil, chief strategist at Merck Finck, a private bank.

Investors in Germany are therefore hoping in the economic data for indications of how severely the economy is suffering from measures to combat the pandemic. According to preliminary figures, the ifo business climate index, which reflects the mood of the companies, fell to 87.7 points in March, the lowest level since August 2009. At that time, the financial and debt crisis had an impact on the economy. The purchasing manager indices, which will be published on Tuesday, are also expected to decline.

The focus is on the medical industry

The business results of the companies, however, move into the background. Above all, investors are now looking at what outlook the group’s managers are giving. Many companies have already drastically cut their forecasts for the current year. On Monday, for example, the energy company Innogy publishes its annual report, on Wednesday the figures for the utility company Eon and the real estate group Deutsche Wohnen are on the agenda. The telecommunications companies United Internet and Drillisch will follow on Thursday.

The news from medicine is getting more attention. The best report would be a vaccine against the virus, which, according to the Robert Koch Institute, is not expected until 2021. An effective drug could also lift the mood on the stock exchange.

More: US exchanges end black week.

With material from dpa and Reuters.

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