Frankfurt has entertained high hopes of replacing London as Europe’s financial centre after Brexit, but you wouldn’t think so considering the recent performance of its main stock-market index.
The was actually a little higher in morning trading today, up 1.16% at 11,417.80, but the longer-term trend has been firmly downwards.
During the last month, the index has fallen from 12,339.0303 on 1 October to 11,287.3896 on 30 October.
Corporate worries depress stocks
It started the most recent three-month period at 12,805.50 on 31 July, and a year ago stood at 13,465.5098 on 1 November 2017.
Corporate woes explain some of the decline. Disappointing results from Germany’s flag-carrier Beiersdorf, that own Nivea and La Prairie, another DAX constituent.did little to bolster investor confidence, and it was a similar story at cosmetics company
But hanging over it all are the problems of , once a symbol of German financial might to rival the once-powerful reserve institution, the Bundesbank, is now subordinate to eurozone institutions.
Deutsches’s shares have fallen by almost 20% in the last six months, and the third-quarter results last week were disappointing.
Persistent rumours suggest Deutsche will merge with fellow German giant , but these have been denied.
In terms of damage to Germany’s commercial self-esteem, the problems of Deutsche Bank can be compared to the emissions scandal at , although the bank has done nothing illegal. For decades, it was held up as a prime example of the superiority of Germany’s “Rhineland capitalism”, as against the “Anglo-Saxon” variety practised in the City of London and Wall Street.
Merkel’s departure deepens the gloom
German banks, it was said, developed long-term relationships with the businesses to whom they were lending, while British and American banks took a long-term view.
Aside from business issues, Germany’s political problems may also be weighing on the DAX. These multiplied in recent days as Chancellor Angela Merkel announced she would not be seeking to be re-elected as leader of her Christian Democratic Union (CDU) party in December and would stand down as Chancellor in 2021.
Her 13-year tenure saw her rise to become the undisputed leader of the European Union countries, playing a pivotal role in organising Europe’s response to the financial crisis. But her apparently-invincible popularity went into decline after 2015, when she opened Germany’s borders to a million refugees.
The backlash saw the rise of the right-wing Alternative for Germany party, weakening the CDU and its Bavarian sister party, the Christian Social Union.
Angela Merkel’s departure is not the only political cloud over German shares. Italy’s populist coalition government is on a collision course with Brussels over its financial plans and tough trade rhetoric from President Donald Trump poses risks for Germany’s mighty export machine.