DAX Market Overview Week 16

8/7/2019 DAX Market Overview Week 16

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Market Overview: Frankfurt Stock Exchange (DAX) 2011, wk. 1

Highlights:

The Deutsche Borse DAX index decreased by 1.69%

Infineon Technologies AG (IFX) was the most successful performer

The worst performer was RWE AG (RWE) with a decline of 7.57%

The week 16 was shorter due to Easter holidays. From Monday till Thursday the DAX index increased by1.69%, resulting in a closing value of €7.295. There was a remarkable decline in the beginning of the week,however, the DAX value has been rising since then. Similarly like in the last week, tendencies in FrankfurtStock Exchange are more positive in comparison to other markets (see graph below).

Fi

gFigure 1 Changes in the DAX index from April 15 till April 21. Compared to changes in the

New York Stock Exchange (NYSE), International and Commodities ETF (MSCI), and the Tokyo

Stock Exchange (Topix Core 30)

An analysis on the business confidence has been published; the Ifo index of business sentiment has fallen to110.4 in April from 111.1 in March, which is close to the expected value. Despite this decline, Ifo stillremains close to its record high and shows a continuation of strong growth. As the German economy has

roared ahead, unemployment has fallen, boosting domestic demand in a country that has historically reliedheavily on exports for its success. "Despite considerable risks at the international level, the situation of thefirms in Germany remains excellent," said by Hans-Werner Sinn, president of the Ifo Institute.

The week 16 was most successful for Infineon Technologies AG (IFX) with a gain of 5.94% andBayerische Motoren Werke AG (BMW) with a gain of 5.4%. In contrast, RWE AG (RWE) andMuenchener Rueckver AG (MUV2) were the biggest losers with a decline of 7.57% and 5.04%respectively.

1 Market Overview is not an advice. Neither authors nor iFund or other representatives are liable for possible use of information contained iit. Relatively reliable public information (Exchanges websites, Bloomberg, Reuters, etc) was used to produce this Market Overview.

http://www.bloomberg.com/apps/quote?ticker=IFX:GR





The best-performing stock this week was Infineon Technologies AG (IFX), Europe’s second-largestsemiconductor manufacturer. The shares had two significant jumps this week: one on Monday evening and

another on Wednesday morning. The shares were slowly declining on Monday but surged nearly 4.2% fromits intraday low after the company announced that the second-quarter sales and profitability beat thecompany’s own forecast on surging demand for automotive and industrial semiconductors. The stock rose4.3 % to €7.45 on Wednesday after Intel, Infineon’s rival, announced its sales forecasts which beat analysts’estimates. The shares closed at €7.4 on Thursday ending the week with a total gain of 5.94%. Withrecovering demand for cars and technology and the recent restructuring, the outlook for the company isfavorable. The company also claims to have 2.7 billion euro in funds to spend on organic growth,acquisitions and returning money to shareholders. Some analysts have ‘buy’ recommendations with target

prices as high as €9.2 on the stock.

Figure 2 Performance of Infineon Technologies AG (IFX) (week 16)

The other stock that performed well this week is Bayerische Motoren Werke AG (BMW). The week was particularly good for Germany’s biggest automakers as European services and manufacturing growth inApril accelerated more than expected. After declining more than 1% on Monday, BMW’s shares reboundedand gained 2% on both Tuesday and Wednesday. The stock closed at €61.00, up 5.4% this week. With thedisruption in supply chain of Japan’s automakers after the earthquake the German companies expect higher sales and profit margins, especially in the US market. The luxury car manufacturers also forecast a double-digit increase in sales in China, meaning that the shares may advance even further.

Figure 3 Performance of BMW (thick red line), Volkswagen AG (VOW) (thin blue

line), and Daimler AG (DAI) (thin black line) (week 16)







Figure 4 Performance of RWE AG shares (red) and DAX Index (green) (week 16)

The biggest fall in share price of this week was for RWE AG (RWE.DE). The opening price € 46.5 steadily

decreased in first two days of the week. This was followed by sharp decrease in share price on Thursday.

The closing price € 42.98 meant -7.57% change during week 16.

RWE AG is electricity power and natural gas utility. This company is second largest electricity producer in

Germany serving over 20 million customers. In 2010 it employed around 70 thousand employees and

operated with 3.308 profits.

Although investment analysts states that RWE has underperformed in last 4 weeks they are predicting 12-

month price target at € 48.00. However the main reason for substantial price fall on Thursday was

announcement by RWE chief executive on group’s shareholder annual meeting. He admitted that Germangovernment’s decision to halt two nuclear plants will significantly reduce company’s earnings.

Figure 5 Performance of Muenchener Rueckver AG (MUV2.DE) shares (red) and DAX

Index (green) (week 16)

115.8 110 5.04%

Another company which underperformed in week 16 was Muenchener Rueckver AG (MUV2.DE). On 18th

of April its share price lost about 2%.Further on it managed to get 1% back by the time of closing market on

Wednesday. Another shock was experienced on Thursday when share price lost about 5% of its value and

was only €110 i.e. €5.8 and 5.04% less than week’s opening price.





Munich Re is the biggest worldwide operating reinsurance company. It also works in insurance and assets

management. Company is mainly known by its subsidiary ERGO, which is its primary insurance arm. ERGO

is second largest primary insurance company in Germany.

Also here s group’s annual general meeting was the reasoning for share price decrease on Thursday. Chief

Executive Nikolaus von Bomhard announced that due to harsh earthquakes in Japan company most likely

will have loss in first quarter. It already has paid claims amounting €2.7 billion.

This week we decided to add some technical analysis:

Exchange background at the beginning of the week - indefinite.

Resistance level, 7630, the upper bound of the channel.

1st level of support - 7170, mid-channel.

2nd level of support - 6660, the lower boundary of the channel.

Tenkan and Kijun - lines are neutral, which is likely to point a temporary halt of the trend.

Line Chinkou-entered the price chart and signals to equal strength of bulls and bears in the market for

stock index DAX.

Cloud indicator Ishimoku - signals a continuation of growth of prices of the stock index.

The slope of the channel - up.

Figure 6 Technical analysis of DAX, week 16.





In conclusion, we can say that he last week hasn’t brought any new maximum points, but no major declines

could be observed as well. The corporate reports were quite ambiguous to use them as a base for future

actions. Another lowering of Ireland’s credit rating influenced DAX index negatively – recent stress testsshowed that 24 billion euro required maintaining functionality of the country. However, we cannot say, that

the week had a selling tendency. Stock index DAX has successfully entrenched in the middle of the trading

channel and it is likely that next week growth resumes. Despite all the negative information,

the market still shows the willingness to buy, so it is not recommended to close previously opened positions.

Review by Liene Apsalone, Kārlis Malcenieks, Dmitrijs Sureņans, Justinas Šukys


DAX Market Overview Week 16

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