Time for Germany to take control of the brand say top investors

The German stock market has this week served as a barometer for market sentiment on eurozone growth and financial stability. Yet the export-dominated industry will have to work harder to retain its ‘brand’ amongst Asian investors.

This week the Dax has tracked the euro rollercoaster, rebounding today from two days of losses. German stocks today rose on the country’s improved manufacturing data, lower unemployment figures, and the signing of the region’s fiscal compact.

'More volatility is expected for the German equity market as the country is still seen as the area’s safe haven,' says Anita Paluch, senior equity trader at Geko Global Markets in London.

Liquidity boosts from the US and the ECB will add weight on positions, says Paluch.

Stronger PMI data from China was also 'vital' for better sentiment towards German equities, she added.  

The German stock market is at a ‘turning point’, says Christoph Ohme, co-manager of the DWS Deutschland German equities fund alongside Tim Albrecht.

‘It is very difficult to compete with low cost economies on commodity products . The focus is on premium brands where Germany has a good position for example is in the automobile or industrial sector.’

Some of the biggest Dax gainers and exporters to Asia this week included car manufacturer BMW and truckmaker MANS SE, partly owned by Volkswagen AG.

'We are watching the Chinese produce more and cautious that import doesn’t fall from Germany. For Germany it is important to keep its share of exports to China. We particularly need to keep the competitive edge in premium brand products for example in premium brand automobiles,' Ohme said.

He added that the investment team hopes to see the euro currency stabilise on political negotiations.

‘The weak euro has helped German export in the short term. In the long term, though, we would prefer a stabilization of the EUR as a solid currency as an indication of a healthy economy.'

Figures released today from data analysis firm Markit showed that the German manufacturing sector turned to growth in January for the first time since September.