“Quit wasting time!”
That’s the message that Eurozone finance ministers had for Greece on Monday. Greece hasn’t made much progress towards resolving its fiscal problems since receiving a four-month extension from its creditors weeks ago. But now Greece seems to be heeding the message: On Wednesday, Greek financial experts began talks with international creditors, a first step towards agreeing to reforms and accessing additional capital. However, on Thursday, German Finance Minister Wolfgang Schaeuble said that the onus was still on Greece to help itself.
More positive data emerged about the German economy this week. February wholesale prices, while down 2.1% year-over-year, were up by half a percent over January, alleviating some deflation concerns. Also, according to the Federal Statistics Office, Destatis, the annual rate of inflation rose last month, if only by 0.1%. And while the Harmonized Index of Consumer Prices (HICP) did fall – indicating deflation isn’t completely licked – it was likewise only by 0.1%. The ECB began its bond-buying program on Monday, which should further mitigate deflationary concerns.
Germany’s trade surplus narrowed in January, from 21.6 billion euros in December to 19.7 billion euros. Both exports and imports fell on an adjusted basis, but the drop in exports (2.1%) was larger than the drop in imports (0.3%). Is this good or bad? Well, generally speaking, a larger trade surplus is the sign of a stronger economy, so a drop could be a bad thing. However, Germany’s economy has long been criticized for relying too heavily on exports, so from that standpoint, this is positive news.
I think this data, coupled with positive numbers from previous weeks, indicates that the German economy continues to improve. I would also say to investors who may still be hesitant about buying German stocks: If not now, when? „Quit wasting time!”
The Major Indices
3.4 was the number for the week, as most of Germany’s major indices advanced by that percentage, including the DAX, HDAX, MDAX, and TecDAX (although the latter was marginally closer to 3.5%). The SDAX was a laggard again this week, advancing only 2%. All of these beat the EuroStoxx 50, which was ahead by a mere 1.8%. Thus far for the year, the DAX is up 21.4%, and sets new record highs on a near-daily basis, which makes me very, very happy.
Tops and Flops for the Week
TOP: Commerzbank AG (ETR:CBK) (FRA:CBK) was Friday’s big DAX winner, with shares up by 4.4% despite seeing its 2014 net profit plunge more than 50% to 264 million euros from a previously-reported 602 million euros. The bank booked additional charges to wrap up a $1.45 billion settlement with U.S. authorities over alleged sanctions violations. So why was the stock up? Investors are probably glad to have the whole incident behind them (as, I’m sure, is Commerzbank!).
TOP: Shares of career networking website company XING AG (ETR:O1BC) (FRA:O1BC) jumped 11.5% on Monday to a record high of 147.60 euro, after Jeffries analyst James Lockyer upgraded his recommendation from “hold” to “buy,” and raised his price target more than 50%, from 112 euro to 170. Lockyer felt that the stock was cheap compared to its peers. This was a particularly large move to have resulted from a single analyst’s forecast. The market seemed to think so too on Thursday, as XING became the biggest HDAX loser of the day, dropping 3.8%. Even so, the stock is still in record high territory.
TOP: Shares of Draegerwerk AG & Co. KGaA (ETR:DRW3) (FRA:DRW3) rose nearly 9% on Wednesday, as the medical and safety technology company reported strong fourth quarter numbers. Q4 EBIT was up 8.7%, and EBIT margin was 12.4%. For 2015, the company projected a more conservative forecast, adjusting its sales growth for currency effects, and predicting EBIT margin between 6% and 8%. A day earlier, the company announced it would buy GasSecure, a Norwegian company that manufactures wireless gas sensors.
FLOP: Suedzucker AG (ETR: SZU) (FRA:SZU) hasn’t been a particularly sweet stock to own lately. The sugar and bioethanol producer is down more than 60% from its highs in mid-2013. Falling sugar and bioethanol prices are mostly to blame. The stock was the biggest HDAX loser on Wednesday, dropping more than 2%. A further 1.1% drop on Thursday now has the stock trading at only 80% of book value. For the long-term investor, this may be simply too cheap to ignore. I think it’s unlikely that sugar prices will remain this cheap for more than a year or two, and when they rise, Suedzucker stockholders will benefit.
Bis zu 130 Mrd. US-Dollar investiert Investorenlegende Warren Buffett in nur ein einziges Unternehmen. Das zeugt von riesigem Vertrauen in das Zukunftspotential.
Buffett hat so einige Mega-Milliardeninvestments in seinem Portfolio. Wir haben sie näher analysiert, und angesehen, inwieweit sie sich zum Nachahmen eignen.
John Bromels has no positions in any of the stocks mentioned. The Motley Fool does not own any of the stocks mentioned.