DZ Research Blog

Expertise as added value

The DZ Research Blog offers a broad and in-depth analysis spectrum. Experts from DZ BANK Research make contributions and share their views. DZ BANK Research is one of the largest units of its kind in Germany and other German-speaking countries with 85 analysts and economists. In the DZ Research Blog they analyse current data on economic trends, evaluate the latest developments on the capital markets and comment on the impact of political events on the economy. You too can benefit from this added value of expertise.

New Pfandbrief Act introduces soft bullets, no grandfathering

On Thursday, 15 April 2021, the German Bundestag approved the amendments to the Pfandbrief Act, which was the final parliamentary hurdle. Probably the most important change is the introduction of a possible maturity extension (soft bullet) for pfandbriefe, which will come into force as early as 1 July 2021, also retroactively for all pfandbriefe already outstanding. In future, the cover pool administrator (or Sachwalter as administrator of the cover pool after the insolvency of the pfandbrief bank) will be able to extend the maturity of the pfandbriefe by up to twelve months if necessary. This will better secure the liquidity of the cover pool, which has already been positively noted by the rating agencies. This regulation supplements the cover pool administrator’s toolbox, who is also permitted, for example, to take out bridge loans, sell cover assets or issue new pfandbriefe to bridge liquidity bottlenecks. The directive requires that the redemption…

DAX rises to 15,000 points by the end of the year

DAX companies have come through the crisis year 2020 very well. The reporting season for the final quarter is still underway, but company sales are expected to have fallen by only four percent last year. Profits should have been 14 percent lower than in 2019. In previous recessions, profits fell by an average of one-third, much more than last year. Equity analysts expect profits in Germany’s leading index to rise by 30 percent this year and post record profits again as early as 2022. Although companies‘ earnings expectations in the past have (almost) always proved to be too optimistic in retrospect, this assessment is in line with the course of previous earnings cycles on the stock market. As a rule, it took around two and a half years for the old profit highs to be reached again. The prerequisite for a sustained recovery in corporate profits remains a stable forecast…

David vs. Goliath 1:0 – What’s really behind the „GameStop“ speculation

In one of the biggest hedge fund bailouts since the fall of Long-Term Capital Management („LTCM“, 1998), the firm „Melvin Capital“ was saved from ruin this week. The firm had previously speculated on sharply falling prices of various stocks such as Gamestop (selling video games) or AMC Entertainment (cinemas). Both companies had recently suffered greatly from the Corona crisis and the structural trend towards online media, so betting on falling prices seemed lucrative. But the organised resistance of numerous „small investors“, organised via the internet platform Reddit, destroyed the hedge fund’s strategy within a few days. The investors colluded with each other and drove up the prices of said shares with small purchases each.  Since, for various reasons, more Gamestop shares were sold short than actually existed, the so-called „short squeeze“ occurred and Melvin Capital had to cover open positions at dramatically higher prices. In view of the parabolic price…

Family as a success factor

A new study by DZ BANK Research shows: Family businesses are of great economic importance for Germany: over 90 percent of businesses are family-owned. They are not only located in urban areas, but often also in rural regions. In some cases, they are of enormous importance for the economic structure there. The Corona pandemic is also leaving its mark on family businesses. According to an ifo survey, around 80 percent of businesses suffered a drop in orders last year. Family businesses are facing structural challenges. Demographic change will strongly influence the future development of businesses. In the context of generational change, a suitable successor is not always found, and the shortage of skilled workers is also a problem in many industries and rural regions. On the technical side, digitalisation is changing established business models and structures. Especially in rural areas, however, the expansion of the digital infrastructure is not yet…

Quality label for energy efficient mortgages goes live

The „Energy Efficient Mortgage Label“ (EEML), a new quality label that banks can obtain for their mortgages granted to finance energy efficient properties, will soon be introduced to the banking market. The label, which was primarily initiated by the European Mortgage Federation/ European Covered Bond Council (EMF-ECBC), will be officially launched at a virtual event on 12 February. The EEML is intended as a private-sector quality label for consumers, lenders and investors to identify energy efficient mortgages in the portfolios of credit institutions. It is also intended to support „green“ projects at EU level (e.g. EU Green Deal). Banks can apply for the EEML for their loan programmes that meet the requirements for energy efficient mortgages defined by the Energy Efficient Mortgage Initiative (see chart) as part of a self-certification process. Upon receiving the label, banks must report at least quarterly on key features of their EEM portfolio using a…

Euro-area economic outlook: The hope for the recovery lives!

The Corona pandemic is in the middle of its second wave, but the signs of an imminent economic upturn are increasing. This is illustrated by the current development of out leading economic indicator. The DZ BANK Euro Indicator rose by 0.8 percent to a level of 98.8 points in January 2021. This means that the indicator’s annual rate of change of +0.2 percent is above the zero line again for the first time in around two and a half years. The setback in November, when the beginning of the lockdown in a whole series of countries had a noticeable impact on the European sentiment indicators in particular, was more than made up for in the past month. Almost all the sub-indicators included in the calculation have recently contributed to the improvement in our leading indicator.  For example, consumer confidence in Europe recovered somewhat in December according to the EU Commission’s…