Stocks in Review: Germany vs. Greece

This week highlighted the differences between Germany, the strongest economy in the Eurozone, and Greece, the weakest, as the economies of both countries moved global markets this week.

Germany moved the markets up on Thursday by posting incredibly strong December industrial orders numbers. According to the National Statistics Office, industrial orders rose 4.2% month-over-month, reaching their highest level since 2008. This helped the euro to not only rise 1.2% against the dollar, but also to hit its highest mark against the Swiss franc since the Swiss central bank uncapped its currency in mid-January. Unicredit economist Andreas Rees called the numbers “big-bang news” and stated, “there can be no doubt now – we’re witnessing an economic pickup.”

But what Germany giveth, Greece taketh away.

Or rather, the ECB taketh away as a result of Greece’s economic situation: on Wednesday the bank made the surprise announcement that it would no longer accept Greek bonds as collateral. Greek bank stocks plunged on the news, and uncertainty about the country’s future kept markets soft. Josh van Dress, chief investment officer of New York-based Able Capital Management explained why: “We’re paying quite a bit of attention to the Greece situation, where there’s so much political and financial unrest. Investors are really looking for peace of mind, and it is difficult to get that.”

The rift between the two countries was also on display on Thursday, as the Greek and German financial ministers issued a joint statement in Berlin. Germany’s finance chief, Wolfgang Schäuble, said that he and Yanis Varoufakis, the Greek financial minister, had “agreed to disagree,” but Varoufakis objected that they hadn’t even gotten that far. “It was never in the cards,” he said.

One thing is clear to me: Until there is some resolution to the Greek economic crisis, the German economic engine won’t be able to fully take off.

The Major Indices

As of Thursday’s close, the major German indices were all up between 0.78% (TecDAX) and 2.7% (SDAX). The DAX was nearing the 11,000 mark at 10,905.41, up 1.74%, roughly on par with both the HDAX and the EuroStoxx 50, both up 1.68%. The MDAX, meanwhile, was just behind the SDAX, rising 2.61%.

TOPS and FLOPS for the Week

TOP: Suedzucker AG (ETR:SZU) (FRA:SZU) had an eye-popping leap on Tuesday, rising 17.21% on the news that Goldman Sachs was dropping its nearly two-year-old sell recommendation for the company. Goldman Sachs analyst Fulvio Cazzol predicted that the tough times for the company would soon be behind it, particularly in 2017, when the EU’s sugar regime – which stabilizes sugar prices – is set to expire.

TOP: Investors bid up shares of microcomputer manufacturer Kontron AG (ETR:KBC) (FRA:KBC) by 8.65% on Wednesday after it announced a smaller-than-expected quarterly loss in its first quarter. DZ Bank analyst Markus Turnwald was likewise impressed, changing the recommendation for the company to “Buy” from “Sell.” Despite the fact that the stock has lagged the TecDAX for the past 18 months, Turnwald sees its price rising in the near future. “It’s one of the most attractive German industry stocks,” he wrote.

TOP then FLOP: Shares of light bulb manufacturer Osram Licht AG (ETR:OSR) (FRA:OSR), which was spun off from Siemens in 2013, had a bright start to the week, rising 10.2% over the course of Monday and Tuesday, after the company reported a better-than-expected 23 percent increase in adjusted operating profit for the first quarter, aided by increased sales of automotive lamps and LEDs. But shares dropped again on Wednesday and Thursday, after new CEO Olaf Berlien said he would not follow in the footsteps of rival bulbmaker Dutch Philips by splitting the company in two, separating the classic and digital lighting businesses. Berlien also said he wants to speed up restructuring at the company. By Thursday’s close, the stock was back down 6.7%, little more than a euro ahead of where it began the week.

FLOP: Airline Deutsche Lufthansa AG (ETR:LHA) (FRA:LHA), after consecutive weekly gains stretching all the way back to mid-December, finally hit a snag this week. The stock was down 5.59% for the week as of Thursday’s close after Bloomberg reported that at least five analysts expected the company not to offer a dividend for fiscal year 2014. One of the analysts in question, Jordan Rothenbacher of Equinet Bank, said that omitting the dividend would “preserve cash and equity,” and possibly would send a message from shareholders to pilots – with whom the airline is locked in a struggle over retirement benefits – of the need for everyone to contribute, “possibly paving the way for a solution of the conflict later this year.”