{"id":64287,"date":"2023-09-22T15:52:56","date_gmt":"2023-09-22T19:52:56","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/heres-what-germany-should-be-called-instead-of-the-sick-man-of-europe-says-deutsche-bank\/"},"modified":"2023-09-22T15:53:00","modified_gmt":"2023-09-22T19:53:00","slug":"heres-what-germany-should-be-called-instead-of-the-sick-man-of-europe-says-deutsche-bank","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=64287","title":{"rendered":"Here\u2019s what Germany should be called instead of the \u2018sick man of Europe,\u2019 says Deutsche Bank"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002534610\" role=\"document\">\n<p>The hurdles facing Germany\u2019s economy in recent years have been plentiful, but the \u201csick man of Europe,\u201d label is unfair, say Deutsche Bank strategists, who see promise for investors in the region\u2019s biggest economy.<\/p>\n<p>Contrary to the rest of the eurozone, Germany has only managed to get back to its pre-COVID growth level, yet a title of \u201csore athlete\u201d is more accurate, say Maximilian Uleer, head of European equity and cross asset strategy and Carolin Raab, European equity and cross asset strategists, in a note to clients that published Friday.<\/p>\n<div class=\"paywall\">\n<p>\u201cGermany has been facing multiple challenges, from rising energy costs, its high manufacturing exposure, to weak demand from its export destinations. Some of the challenges are \u2018homemade\u2019 and might persist, while others could start to unwind and soon turn into opportunities,\u201d the pair said.<\/p>\n<p>Germany\u2019s economy is the worst-performing of the developed world this year, with both the International Monetary Fund and European Union forecasting contractions in growth. <\/p>\n<p><strong>Read:<\/strong> Germany\u2019s economy struggles with an energy shock that\u2019s exposing longtime flaws<\/p>\n<p>But the strategists say economic growth is a poor proxy for German equity performance. The German DAX index<br \/>\n        DX:DAX<br \/>\n       is up 18% since the end of 2019. DAX constituents generate just 18% of their revenues domestically, compared to 22% from the U.S. and 15% from China. <\/p>\n<p>Across the broader HDAX index of 100 members, manufacturing, information technology and financial services are the main contributors to equity performance.  That\u2019s as public services, trade, business services and real estate, all of which contributed significantly to GDP over the past four years, are underrepresented in the indexes. <\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<p>          <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>Germany has also managed to grow its real GDP by 26% over the past 20 years , and keep its debt-to-GDP ratio stable, while the eurozone (including Germany) has seen that debt ratio climb 30% since 2003. The short term has seen lower growth since COVID-19, and rising leverage owing to fiscal support measures to mitigate the pandemic and the war in Ukraine. <\/p>\n<p>Again, the strategists see a silver lining. \u201cGoing forward, in our view, Germany has bigger leeway with regards to its fiscal support capacity, as its absolute debt\/GDP ratio remains one of the lowest among the eurozone members,\u201d said Uleer and Raab. <\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<p>          <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>Among the country\u2019s big hurdles is rising energy costs, with the pair noting that the country\u2019s net-zero goals are laudable, but pose a \u201csubstantial challenge\u201d to its energy-intensive industries. Power prices remain substantially higher than three years ago and are double the cost of those in the U.S.<\/p>\n<p><strong>Also read:<\/strong>\u00a0Inside Germany\u2019s industrial-sized effort to wean itself off Putin and Russian natural gas<\/p>\n<p>\u201cThis price differential, combined with stronger fiscal support for energy-intensive companies in the U.S. via the Inflation Reduction Act, weigh on the competitiveness of German corporates,\u201d said the strategists. <\/p>\n<p>As for opportunities, China\u2019s reopening remains a positive for DAX companies, though that country also seems to be making slow progress. Chinese households are sitting on massive savings still waiting to be spent, said the strategists. They advise investors to wait for data that confirms a stabilization of the country\u2019s bumpy property market before they would turn more positive. <\/p>\n<p>Overall, Deutsche Bank expects inflation to normalize in the coming 12 months and low growth in 2024, but a rebound in 2025. <\/p>\n<p><strong>Plus: <\/strong>A 1-liter stein of beer at Munich\u2019s famed Oktoberfest will cost nearly $15 this year<\/p>\n<p>And what\u2019s priced into the DAX already? Even after a gain of 12% this year so far \u2014 French<br \/>\n        FR:PX1<br \/>\n       and Greek stocks<br \/>\n        GR:GD<br \/>\n       \u2014 are beating Germany by a respective 20% and 30% \u2014 the index is still cheap and trading at a 20% discount to its 10-year average on a forward one-year price\/earnings basis. Germany can count on stronger U.S. data, even if Europe continues on a weak path. <\/p>\n<p>\u201cWe expect the DAX to hold up in 2024, and do not forecast the index to underperform, despite lower German GDP growth as compared with the rest of the eurozone,\u201d they said.<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/heres-what-germany-should-be-called-instead-of-the-sick-man-of-europe-says-deutsche-bank-e5c45c3f?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The hurdles facing Germany\u2019s economy in recent years have been plentiful, but the \u201csick man of Europe,\u201d label is unfair, say Deutsche Bank strategists, who see promise for investors in the region\u2019s biggest economy. Contrary to the rest of the eurozone, Germany has only managed to get back to its pre-COVID growth level, yet a [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":64288,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-64287","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Here\u2019s what Germany should be called instead of the \u2018sick man of Europe,\u2019 says Deutsche Bank | iFintechWorld<\/title>\n<meta name=\"description\" content=\"The hurdles facing Germany\u2019s economy in recent years have been plentiful, but the \u201csick man of Europe,\u201d label is unfair, say Deutsche Bank strategists,\" \/>\n<meta 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