Germany’s main equity benchmark concluded its biggest two-year run in more than a decade, leaving the country’s European rivals trailing in the dust.
The DAX Index yesterday closed the year 19 percent higher to extend a rally since January last year to 43 percent. While the export-heavy gauge has lagged the S&P 500 in the US for this year, it far outpaced regional peers including the UK’s FTSE 100 and France’s CAC 40.
German markets will be closed on New Year’s Eve and Jan. 1 with trading set to continue on Thursday.
Photo: Daniel Roland, AFP
Expectations for a healthy global economy and a recovery in China have supported German stocks at a time when the local economy is facing challenges. SAP SE was the biggest contributor to this year’s continued gains as investors sought technology plays, accounting for nearly a third of the index’s rally.
A surge in excess of 300 percent for Siemens Energy AG added to the outperformance, while an increase in defense spending helped fuel Rheinmetall AG shares to more than double in value.
These strong performances helped to offset struggles in some of Germany’s core sectors.
Automotive stocks were hurt by lagging demand and the growing strength of Chinese electric-vehicle manufacturers, with the likes of Volkswagen AG, Porsche AG and BMW AG all suffering losses of 20 percent or more.
Bayer AG was the biggest loser with a 43 percent decline as the chemical maker’s struggled with its turnaround plan and legal battles.
Strategists are now expecting more muted gains in the coming year, according to a Bloomberg survey earlier this month. A key point of interest will be February’s national election, which could unlock more fiscal spending toward a fragile domestic economy.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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