Stock markets worldwide are teetering on the edge of a crash as the coronavirus pandemic continues to ravage global economies. Analysts are warning of a deep global recession if the epidemic continues to worsen.
German stocks haven’t been spared, with most recording a generally downward spiral. The DAX 30, an index composed of the 30 major German companies trading on the German stock market, has lost 22.81 per cent since February.
In March 2020, the DAX 30 performance fell to its lowest trading level since early 2016 as global indices turned heavily negative on a year-to-date basis. However, by the end of the month, the German DAX showed a strong recovery back above the 9,000 level after the US Federal Reserve announced a massive open-ended bond buying scheme. Today, as of April 14, 2020 the index is hovering around 10,620 showing strength to rally up to the 12,000 level.
Trade Germany 30 - DE30 CFD
German stock exchange: economic outlook
Nobody knows how long the crisis will last, but even then the impact is likely to be felt for at least a year. The economy in Germany today is the result of a longer slowdown that started long before the coronavirus crisis. If current data is anything to go by, it's about to get worse.
Researchers describe it as the “economy in shock” predicting a GDP shrink of more than 4 per cent by the end of 2020. They estimate that the country’s economic output has shrunk by about 1.9 per cent in the first three months of the year. The decline is likely to double and triple as businesses continue to feel the impact of the pandemic.
Even with the uncertain economic future, the German stock exchange still presents a lot of opportunities, especially to mid-term and long-term investors. Day traders should also take advantage of the ever-increasing volatility.
German stock exchange news: sectors to target
Like in any other market, the best German stocks to buy for medium-term investments are those that directly benefit from the pandemic. Long-term investors should be looking at stocks with strong technical and fundamentals and with a history of consistent dividend payments.
The stocks that appear to have the most promise for medium-term investment are those in the healthcare and online retail sectors. Social distancing is likely to push online retail stocks to the top as more people turn to online shopping.
Healthcare companies with products that fight Covid-19 are also on a rally and bound to go through the roof as the pandemic continues to unfold. Oil stocks may also be a good bet for long-term investment since most are trading at their lowest, given the current market glut. The rebound is not far off since OPEC and other oil-producing countries have agreed to cut supply.
Top German stocks to watch for trading and investment
According to the Frankfurt stock exchange news, the top buys for medium to long-term investment include Draegerwerk AG (ETR: DRW3), a German medical ventilator manufacturer. With the surge in demand for ventilators, the stock has surged since March.
There is a high likelihood that it will maintain the momentum, as local and international demand continues to rise. The need for ventilators is likely to remain for some time since the coronavirus epidemic has proven they are vitally important.
Furthermore, Draeger has a history of consistent dividend payments. This makes it a good bet for value investors.
Another German stock to watch is BioNTech (NASDAQ: BNTX). The stock is relatively priced and has shown tremendous potential in the recent past. BioNTech is among the companies in the frontline of developing a vaccine for the coronavirus.
The company has partnered with Fosun Pharma, a Chinese pharmaceutical company, to run a human trial of its Covid-19 vaccine by the end of this month. BioNTech also has a great history of dividend payments and is, therefore, a good bet for value investors.
BioNTech stock price chart 2020
Other German stocks to invest in are those with the highest volatility. The best bet for CFD trading appears to be Prosiebensat1 Media (PSM), Dialog Semiconductor (DLG), and Thyssenkrupp AG (TKA). Volatility means constant change, so it is essential that you check our live list of the most volatile stocks on the German stock exchange.
CFDs on oil could be a good bet given the volatility witnessed in the industry recently. Follow our comprehensive chart to explore US Crude oil in real-time.
Unemployment in Germany is already at peak levels with nearly half a million companies filing for state funds to pay workers at the beginning of April. With bleak micro and macro factors, it may seem like a good idea to entirely avoid the stock market.
While short-term investors have every reason to stay put, medium-term and long-term investors have a lot of opportunities to explore. Day traders should also take advantage of coronavirus-driven volatility to trade, preferably through CFDs.
The currency, stock, and commodity markets have shown deep volatility since the beginning of the epidemic. Just recently, a Wall Street hedge fund branded 50-cent has reported a profit of $2.6 billion from trading coronavirus volatility. You can also grab the opportunity by trading our stock and commodities CFDs.
The potential remains high, given the state of the economy in Germany today. Follow Capital.com and stay tuned to the latest German stock market news and updates in time to spot the best trading opportunities.