dax market overview week 17

8/7/2019 DAX Market Overview Week 17

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Market Overview: Frankfurt Stock Exchange (DAX) 2011, wk. 16

1 Market Overview is not an advice. Neither authors nor iFund or other representatives are liable for possible use of information contained in

it. Relatively reliable public information (Exchanges websites, Bloomberg, Reuters , etc) was used to produce this Market Overview.

Week 17, which was shorter due to Easter holidays, has brought constant positive trendsto theFrankfurt Stock Exchange.The DAX indexincreasedevery day;the biggest growth was observed onThursday, while Friday¶s closing value of 7,514 is the highest that has been reached this week.Overall, the DAX index value increased by 2.97% over the week 17.Such trends can be observed inother stock exchanges as well; however, DAX remains one of the most successfully performingindexes (see graph below).

Figure 1 Changes in the DAX index from April 21 till April 29. Compared to changes in the New York Stock Exchange

(NYSE), International and Commodities ETF (MSCI), and the Tokyo Stock Exchange (Topix Core 30)

On Thursday it was published that German unemployment has fallen below 3 million (7.3 percent)for the first time in almost 19 years in April in adjusted terms, increasing the likelihood thathousehold spending will boost economic growth. This fact supports the good state of Germaneconomy, similarly like the other statistical data that has been published during previous weeks.

The winners of week 17 are Volkswagen AG (VOW) with a gain of 11.95% and PorscheAutomobil Holding SE (PAH3) with a gain of 10.15% . This week was not so fortunate for SAPAG (SAP.DE) and Commerzbank AG (CBK.DE) ,which are the biggest losers with a decline of 4.37% and 2.49% respectively.

Volkswagen AG (VOW) was the week¶s top performer. Volkswagen is a Germany-basedautomobile manufacturer which consists of Automotive and Financial Services divisions. Theshares rose 1.6% on Tuesday and surged ¼5.80, or 4.8%, on Wednesday after the company reportedrecord quarterly operating profit (Ebit more than tripled to 2.91 billion eurosfrom 848 million eurosa year earlier). The increase in profit comes from the rising demand in China where the firm¶s VWand Audi brands attracted more customers. Volkswagen is merging with Porsche, this week¶ssecond best performer, and holds a 49.9% stake in the company¶s carmaking division (Porscheowns a 51% stake in Volkswagen). Porsche reported earnings before interest and tax of 496 millioneuros, more than double compared to last year¶s. The shares continued to climb and rose 3.56% and1.53% on Thursday and Friday respectively as Commerzbank raised target on VW¶s preferenceshares affirming the µbuy¶ recommendation (meaning that the shares are expected to outperform theDAX index by at least 15% over the next six months). The total gain over the course of four dayswas an impressive 11.95% .






Some basic technical analysis of the stock suggests that the downward trend which lasted sincemid-December 2010 may be reversing as strong performance this week broke the resistance lineand the MACD indicator suggests a bullish trend (See figure 3). The readers are welcome toanalyze the stock further and make their own conclusions.

Figure 2 Performance of Volkswagen AG (VOW) (week17)






Figure 3Basic technical analysis of Volkswagen AG (VOW)

The shares of Porsche Automobil Holding SE (PAH3) rose nearly as significantly as VW¶s andthe stock became the second top performer on the Frankfurt Stock Exchange. The shares advanced2% on Tuesday on speculation that Porsche SE may increase sales by 10% this year. As thecompany¶s carmaking division announced increased income thanks to a 62% jump in sales of

Porsche¶s revamped best-selling model, the Cayenne, the shares rallied 5.9% to ¼47.87 per share.The price continued to rise and was up 1.6% on Thursday and 0.6% on Friday, closing at ¼48.82and ending the week with an increase of 10.15% .

A quick look at the technical analysis of the stock shows that although the shares are rising, theymay soon hit the resistance line and start declining, continuing the downward trend which has beenin effect since late January (See figure 5). The MACD indicator, however, does not send the µsell¶signals yet.






Figure 4 Performance of Porsche Automobil Holding (PAH3) (week 17)

Figure 5 Basic technical analysis of Porsche Automobil Holding SE (PAH3)






Figure 6 Performance of SAP AG (SAP) shares (red) and DAX Index (blue) (week 17)

At the very top of loser pedestal for this week stands SAP AG (SAP) . In overall, it underperformedonly on the last two days of the week. It started the week with an opening priceof ¼45.49. The fallin share price on Thursday resulted in -4.37% changes in week 17. The closing price of the SAPwas ¼ 43.50 per share. SAP AG is Europe¶s largest software company. It was set up by five former IBM engineers in 1972 and now employs about 54 thousand employees around the globe. ThisGerman company focuses on enterprises¶ software development and support. SAP AG generated

¼1.816 billion in profits in 2010. On Wednesday the share price has reached a 52-week high i.e.+27% compared to a year earlier. Price dropped because company didn¶t reach the market¶sexpected profits in the first quarter of 2011. Analysts have forecasted profit amounting to half a

billion euros which in reality ended up being only 403 million euros.

Figure 7 Performance of COMMERZBANK AG (CBK) shares (red) and DAX Index (blue) (week 17)

After one week Commerzbank AG (CBK) has ³managed´ to get among the worst performers of

the week. The opening price per share on Tuesday was ¼4.41. It continues the trend of slight fallingwhich started on the 20 th of April. However,the closing price on Friday was ¼4.3 per share resultingin a 2.49% decrease in week 17. Commerzbank AG is one of the largest banks in Germany servingits private and corporate clients with all general financial services. The substantial decrease of share

price after revealed plans about the aim to repay state financial aid hasn¶t fully diminished. Another push down was the Italy-based European UniCredit bank reducing its price target on shares by ¼1.It might make investors reconsider prices of peer banks in the stock market.






Figure 3Technical analysis of DAX (week 17)

Tech analysis shows continuing growth of DAX this week, the bulls are returning to the market.The forecast is that the market will continue to grow in the future.

This week was quite optimistic. A sequence of favorable corporate reports ensured a positive pre-holiday mood. The Germany continues to grow, as the Ministry of finance reported. Also it wasmentioned that the first quarter was experiencing a minor slowdown in growth due to weather circumstances, but in the last month we could observe industrial growth and awakening of the realestate market, as the frozen for the winter projects were being restored. Investors, basing on the pre-

holiday mood, did not fix their profits in the last day and went on holidays with generally opened positions. On Monday the first event to catch their attention will be the meeting of the Fed on thetopic of interest rate.

In conclusion, the buying trend will be maintained after the holidays. The corporate report seasoncontinues, what will keep investors in positive mood. Also the participants will be watching everymove of Bernanke after the Fed meeting, as the rumors about closing the loyalty program earlier keep pressing stock markets not only in the US, but also in EU. Our final recommendation will beto continue buying.

Review by LieneApsalone, K rlisMalcenieks, DmitrijsSure ans, Justinas ukys

dax market overview week 17

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