Dax gives in – Bafin special test lets Flatexdegiro share crash

Dusseldorf Consolidation continues on the German stock market. The Dax closes 0.6 percent lower at 14,447 points on Monday. There are still 19 trading days until the end of the year. And there is a high probability that the Dax will trend sideways in the coming days. It takes an extremely positive or negative message to send the leading index in one direction or the other.

Last Friday’s US jobs data was likely the fundamental message for an end to the 2700-point rally since late September. As a result of the strong increase in jobs and the speech by US Federal Reserve Chairman Jerome Powell on Wednesday evening, there are likely to be only minor interest rate hikes in the USA, but for a longer period of time.

If you include chart technical marks, the Dax has a potential of up to 15,709 points, the stock market high of June. However, prices above 15,000 points without news such as the end of the war in Ukraine or concrete indications of a pause in interest rate hikes are unrealistic.

Investors should rather plan a retest of the 14,150 point mark, which would still be a mini-consolidation of a good 400 points. Only at prices below 14,000 points would the technical chart situation cloud over. The different behavior of institutional investors and private investors as well as the course of the rally in the past few weeks speak in favor of a sideways trend in the coming trading days.

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The figure of 15,884 points, the Dax closing level of the past stock exchange year, is particularly important for the domestic investment professionals. Since then, the Dax has fallen by around nine percent – correspondingly, higher losses than this nine percent in an equity fund are not a good business card for its fund manager. Especially since in negative years on the stock market, the fund managers could reduce the price losses with a higher cash quota, unlike an exchange-traded index fund.

The approaching end of the year makes things even more difficult. Because when selecting the fund at the beginning of 2023, the performance in 2022 already plays a significant role.

Pros don’t want to miss Rally sequel

The put/call ratio of the Frankfurt futures exchange Eurex and the sentiment survey conducted by the Frankfurt Stock Exchange among medium-term professionals show an interesting development: some institutional investors have sold their short positions, and overall they are betting on rising prices. This is a burden for further price development because many players have already bought shares.

The fact that the professionals continue to rely on rising prices after a 2700-point rally is quite an unusual situation. It can only be explained by the behavior during the rally: During the rise of 22 percent within eight weeks, there was a large majority of pessimists among professional investors who did not believe in a continuation of the upward trend and were betting on falling prices.

This, however, was not conducive to the returns of their investment vehicle. And with the end of the year approaching, the pros now prefer to go long so as not to be wrongly positioned again should the rally continue.

>> Read also: Does Puma have to vacate its place in the Dax for Porsche?

According to the behavioral economist Joachim Goldberg, who evaluates the sentiment survey conducted by the Frankfurt Stock Exchange, private investors, some of whom were much more positive, benefited more overall from the Dax rally in November than their institutional counterparts, who were mostly negative at the same time. This is also due to the fact that private investors do not have the same pressure on returns as professionals.

They, in turn, are now worried that they will have to give up their winnings again. The reason for this is the turbulent stock market month of September, during which the Dax fell to its low for the year of 11,862 points. Accordingly, many private investors have put products in their portfolios to protect their profits.

Significant price gains in China

This behavior is a support for the Dax. Because when the private investors sell the put products, the Dax index is bought again. This works like a short sale.

When selling short, short sellers first borrow shares and immediately sell them in the hope of being able to buy them back at a lower price before the redemption date. The difference between the sale and repurchase price is the profit.

In the last stock market month of November there was no significant setback, only mini-consolidations of a maximum of 400 points. This did not present a cheap entry point for those who had missed the trend so far. The price slide of 200 points after the US labor market data on Friday had already halved 30 minutes later. So much too quickly for investors willing to buy to get in.

On the other hand, the mood on the stock exchanges in Shanghai, Shenzhen and Hong Kong is friendly, with gains of up to 4.3 percent. The Hang Seng China Enterprise Index on the Hong Kong Stock Exchange has already recovered by 35 percent from its October 31 low.

The further easing of Covid-19 also outshines the disappointingly weak purchasing managers’ index for the service sector today. The hope prevails that the service sector, which is becoming increasingly important for the Chinese economy, will recover with the easing of the Covid protective measures.

Little reaction to the oil price cap

The movements on the oil market are manageable. The prices for the North Sea oil Brent and the US variety WTI each increased by almost one percent to just under 85 and around 79 dollars per barrel (159 liters) by the evening.

At the start of the week, the European Union put an extensive embargo on Russian oil into effect. In addition, the EU wants to work with other large countries to push through a price cap for Russian oil at 60 dollars. Both are intended to affect Russia financially and are a reaction to Russia’s war of aggression against Ukraine. Russia has announced that it will not accept the price cap and will not ship to any country that adheres to the cap.

Meanwhile, the oil association Opec plus, led by Saudi Arabia and Russia, decided at the weekend to leave its production unchanged for the time being. Since the beginning of November, the 20 or so countries have been producing significantly less oil, and this is to be maintained. The decision was expected on the market.

Look at the individual values

Flatex degiro: Four weeks before the end of the year, the online broker Flatexdegiro again lowered its sales and earnings targets for 2022. The SDax company also announced a restructuring of the board and risk management at the weekend because the financial regulator Bafin found deficiencies in business practices and corporate management during a special audit.

CFO Muhamad Chahrour hands over his post to group manager Benon Janos and is promoted to deputy CEO Frank Niehage. Due to new capital requirements, Flatexdegiro will retain the annual surplus. The profit warning caused the stock to fall by 36.7 percent by the close of trading. Even before this development, the paper had more than halved since the beginning of the year.

Vitesco: The titles of the drive technology manufacturer increase by 5.2 percent after a buy recommendation from the bank JP Morgan.

Bayer: Bank of America has withdrawn its buy recommendation for the pharmaceutical company. Bayer shares fell by 3.2 percent on Monday until the close of trading, making it the biggest daily loser in the Dax.

Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.

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