Westend Brokers AG
Silvia Quandt & Cie. AG, Merchant & Investment Banking: In-between the lines – Bernhard Eschweiler
Silvia Quandt & Cie. AG, Merchant & Investment Banking / Schlagwort(e): Sonstiges/Sonstiges – Confidence revival continues despite Greek ordeal – German GDP weaker in Q4 2011 but set to recover in Q1 2012 – ‘Mittelstand’ and Emerging Markets key to German growth prospects Market confidence continues to improve. Even Greece’s struggle to agree to the terms of the second rescue package could not spoil the good mood. Equity markets moved sideways this week, which is impressive after the rally last week and the mix of political and economic news this week. Euro-area sovereign spreads generally inched lower. Particularly interesting is the decline of Portuguese spreads (the ten-year spread over Bunds dropped from above 1200bps to below 1100bps), which implies that investors are less worried about contagion risks should Greece default. The improved market sentiment reflects growing confidence that a sharp downturn in economic activity will be avoided and that the Euro debt crisis will not spiral out of control. Monetary policy action, especially the liquidity injections by the ECB, has been instrumental for the change in sentiment. It is too early to say whether the optimism is fully justified, yet most signs are encouraging. When we went to press today, no final agreement has been reached between Greece and the Troika. Some uncertainty remains, but the probability of a positive conclusion is very high. Greece has already accepted most conditions, which shows that the priority of the key political parties is to avoid default. Germany to return to positive growth in Q1 Actual economic news have been mixed. Activity reports show widespread weakness in the final quarter of last year. Most forward-looking indicators suggest that activity will rebound in the first quarter of this year. This is also true for Germany. The weak December industrial production report suggests that real GDP probably declined by 2% annualized in the fourth quarter. The continued improvement in business confidence through January and better-than-expected manufacturing orders in December, on the other hand, are pointing to a reversal in the first quarter. The temporary nature of the fourth-quarter weakness is supported by the undeterred improvement in labor market conditions through January. We expect economic momentum to return to potential, which would imply 2012 annual growth of 1.5%. Exports to lead again Despite stronger domestic demand fundamentals, especially the improvement in labor market conditions, exports remain the largest cyclical driver in the German economy. Especially upturns are first driven by exports and this time will be no different. Already, the manufacturing order data is showing a turn. After plunging 14.6% annualized in the fourth quarter, foreign orders were flat in Q4 with an improvement in December. Orders from the Euro area fell sharply in Q4, but that was offset by a bounce in orders from the rest of the world. That mix is likely to improve further in 2012. The Euro area will probably remain a drag. However, the latest leading indicators suggest that the downturn is moderating and not getting worse. Demand from the rest of the world, on the other hand, is set to accelerate. That forecast is already reality in the US as seen in the latest labor market reports. The next to turn is Asia. Outside of China, much of Asia has been plagued by weakness in the second half of last year, especially in the tech sector. The latest data now shows that the underlying inventory correction is over, while orders are rising again. The recovery is helped by the gradual easing of monetary conditions. Especially Chinese policy is focusing on growth and employment again after inflation pressures have eased (the inflation increase in January was due to the shift of the Lunar New Year festivities). The recovery in China, the rest of Asia and Emerging Markets more broadly is important for Germany. Europe and especially the Euro area is still the largest export destination for Germany, but the share is declining. The growth momentum comes from Emerging Markets. And that is not only because Emerging Markets are growing faster. The growing share of exports to Emerging Markets shows that German companies have shifted their focus. A study by the Bundesbank last year showed for example that German companies have exploited the growing market opportunities in China much more than their main Euro-area peers. The ‘Mittelstand’ powers ahead The shift toward Emerging Markets by Germany’s industrial titans is well documented. Less known is that this is also true for the so-called ‘Mittelstand’, which is the core of Germany’s industrial base. According to a study by KfW, more mid-sized companies are focusing on Emerging Markets. The Euro area is still the largest market, but the growth is coming primarily from Emerging Markets. Besides trade, the health of the ‘Mittelstand’ is vital for Germany’s growth prospects in general, not least because it is the largest employer. Encouraging in that context is a recently published survey by the German Savings Banks Association (DSGV). The survey reported that 50% of mid-sized companies judge business conditions going into 2012 as better than a year before. Just 2% felt worse off. Nearly 60% of companies said that their equity base has further improved (note that the average equity ratio rose over the last ten years by a fivefold to nearly 20%). And despite increased political, economic and financial uncertainties, almost 40% and 30% of companies plan to increase investment and employment respectively in 2012. Most other companies intend to keep investment and employment unchanged in 2012. Disclaimer This analysis was prepared by Bernhard Eschweiler, Senior Economic Advisor, and was first published 13 February 2012, Silvia Quandt Research GmbH, Grüneburgweg 18, 60322 Frankfurt is responsible for its preparation. German Regulatory Authority: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Graurheindorfer Str. 108, 53117 Bonn and Lurgiallee 12, 60439 Frankfurt. Publication according to article 5 (4) no. 3 of the German Regulation concerning the analysis of financial instruments (Finanzanalyseverordnung):
Company disclosures Article 34b of the German Securities Trading Act (Wertpapierhandelsgesetz) in combination with the German regulation concerning the analysis of financial instruments (Finanzanalyseverordnung) requires an enterprise preparing a securities analysis to point out possible conflicts of interest with respect to the company or companies that are the subject of the analysis. A conflict of interest is presumed to exist, in particular, if an enterprise preparing a security analysis: (a) holds more than 5 % of the share capital of the company or companies analysed; (b) has lead managed or co-lead managed a public offering of the securities of the company or companies in the previous 12 months; (c) has provided investment banking services for the company or companies analysed during the last 12 months for which a compensation has been or will be paid; (d) is serving as a liquidity provider for the company’s securities by issuing buy and sell orders; (e) is party to an agreement with the company or companies that is the subject of the analysis relating to the production of the recommendation; (f) or the analyst covering the issue has other significant financial interests with respect to the company or companies that are the subject of this analysis, for example holding a seat on the company’s boards. In this respective analysis the following of the above-mentioned conflicts of interests exist: none Silvia Quandt Research GmbH, Silvia Quandt & Cie. AG, and its affiliated companies regularly hold shares of the analysed company or companies in their trading portfolios. The views expressed in this analysis reflect the personal views of the analyst about the subject securities or issuers. No part of the analyst’s compensation was, is or will be directly or indirectly tied to the specific recommendations or views expressed in this analysis. It has not been determined in advance whether and at what intervals this report will be updated. Equity Recommendation Definitions Silvia Quandt Research GmbH analysts rate the shares of the companies they cover on an absolute basis using a 6 – 12-month target price. ‘Buys’ assume an upside of more than 10% from the current price during the following 6 – 12-months. These securities are expected to out-perform their respective sector indices. Securities with an expected negative absolute performance of more than 10% and an under-performance to their respective sector index are rated ‘avoids’. Securities where the current share price is within a 10% range of the sector performance are rated ‘neutral’. Securities prices used in this report are closing prices of the day before publication unless a different date is stated. With regard to unlisted securities median market prices are used based on various important broker sources (OTC-Market). Disclaimer This publication has been prepared and published by Silvia Quandt Research GmbH, a subsidiary of Silvia Quandt & Cie. AG. This publication is intended solely for distribution to professional and business customers of Silvia Quandt & Cie. AG. It is not intended to be distributed to private investors or private customers. Any information in this report is based on data obtained from publicly available information and sources considered to be reliable, but no representations or guarantees are made by Silvia Quandt Research GmbH with regard to the accuracy or completeness of the data or information contained in this report. The opinions and estimates contained herein constitute our best judgement at this date and time, and are subject to change without notice. Prior to this publication, the analysis has not been communicated to the analysed companies and changed subsequently. This report is for information purposes only; it is not intended to be and should not be construed as a recommendation, offer or solicitation to acquire, or dispose of, any of the securities mentioned in this report. In compliance with statutory and regulatory provisions, Silvia Quandt & Cie. AG and Silvia Quandt Research GmbH have set up effective organisational and administrative arrangements to prevent and avoid possible conflicts of interests in preparing and transmitting analyses. These include, in particular, inhouse information barriers (Chinese walls). These information barriers apply to any information which is not publicly available and to which any of Silvia Quandt & Cie. AG and Silvia Quandt Research GmbH or its affiliates may have access from a business relationship with the issuer. For statutory or contractual reasons, this information may not be used in an analysis of the securities and is therefore not included in this report. Silvia Quandt & Cie. AG and Silvia Quandt Research GmbH, its affiliates and/or clients may conduct or may have conducted transactions for their own account or for the account of other parties with respect to the securities mentioned in this report or related investments before the recipient has received this report. Silvia Quandt & Cie. AG and Silvia Quandt Research GmbH or its affiliates, its executives, managers and employees may hold shares or positions, possibly even short sale positions, in securities mentioned in this report or in related investments. Silvia Quandt & Cie. AG in particular may provide banking or other advisory services to interested parties. Neither Silvia Quandt Research GmbH, Silvia Quandt & Cie. AG or its affiliates nor any of its officers, shareholders or employees accept any liability for any direct or consequential loss arising from any use of this publication or its contents. Copyright and database rights protection exists in this publication and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of Silvia Quandt Research GmbH. All rights reserved. Any investments referred to herein may involve significant risk, are not necessarily available in all jurisdictions, may be illiquid and may not be suitable for all investors. The value of, or income from, any investments referred to herein may fluctuate and/or be affected by changes in exchange rates. Past performance is not indicative of future results. Investors should make their own investment decisions without relying on this publication. Only investors with sufficient knowledge and experience in financial matters to evaluate the merits and risks should consider an investment in any issuer or market discussed herein and other persons should not take any action on the basis of this publication. Specific notices of possible conflicts of interest with respect to issuers or securities forming the subject of this report according to US or English law: None This publication is issued in the United Kingdom only to persons described in Articles 19, 47 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 and is not intended to be distributed, directly or indirectly, to any other class of persons (including private investors). Neither this publication nor any copy of it may be taken or transmitted into the United States of America or distributed, directly or indirectly, in the United States of America. Frankfurt am Main, 13.02.2012
Ende der Corporate News 13.02.2012 Veröffentlichung einer Corporate News/Finanznachricht, übermittelt durch die DGAP – ein Unternehmen der EquityStory AG. Für den Inhalt der Mitteilung ist der Emittent / Herausgeber verantwortlich. Die DGAP Distributionsservices umfassen gesetzliche Meldepflichten, Corporate News/Finanznachrichten und Pressemitteilungen. Medienarchiv unter http://www.dgap-medientreff.de und http://www.dgap.de |
156436 13.02.2012 |