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.
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