After 27 DAX Peaks This Year, German Stock Investors Say Enough
By Roxana Zega
Investors are losing faith in the rally that took German equities to records 27 times this year, withdrawing money from the market at the fastest pace since 2012.
The DAX Index is among the worst-performing gauges in developed markets this month, led by slumps in Volkswagen AG and BMW AG. After surging this year on bets a weaker euro will benefit exporters, the measure has fallen 4.6 percent from its April 10 peak. Traders have pulled almost 3.4 billion euros ($3.7 billion) in about two weeks from the biggest exchange-traded fund tracking German shares, according to data compiled by Bloomberg.
Now that the currency has stabilized and some economic reports have fallen short of forecasts, investors may be concerned the rally went too far, according to R&A Research & Asset Management?s Otto Waser. Reports in April showed services and manufacturing in Europe?s biggest economy slowed, factory orders unexpectedly dropped and investor confidence fell for the first time in six months.
?The market had gone far, and any sort of trends that are threatening the blue-sky scenario invite profit-taking,? said Waser, chief investment officer of R&A in Zurich. ?Few people would allocate fresh money at this stage of the rally.?
A jump in automakers helped push the DAX up 26 percent this year through its April record. Since then, Volkswagen has slumped 8 percent and BMW has lost 5.9 percent as the companies struggle to expand in China, the largest market for cars. Allianz SE, Europe?s biggest insurer and asset manager, cautioned investors against possible stock-market turmoil.