There is no panic on the German stock market yet.

But investor uneasiness is growing noticeably.

The mixture of leaks in gas pipelines, fear of new inflation highs and the monetary policy reactions to them and always new negative economic forecasts around the world led to 11,865 Dax points on Wednesday.

The last time the Dax went that low was before the start of the first Corona winter in November 2020. After more than 16,000 Dax points in January, that's quite a discount.

However, the panic barometer V-Dax New is still only showing values ​​of 32 and is therefore far removed from earlier nervous highs, when the fluctuations on the markets were far more drastic and the V-Dax reached values ​​of 80.

Daniel Mohr

Editor in Business.

  • Follow I follow

"We approach the next few months with great respect," says Joachim Schallmayer, head of capital markets and strategy at Dekabank, at the stock market forecast conference of the Federal Association of Public Banks in Germany, which was held on Wednesday on the 44th floor of the Deka skyscraper in Frankfurt.

"The high level of uncertainty will not change in the fourth quarter either." But this does not have to be a bad environment for equity investors.

"Further significant interest rate increases are already included in the prices, a historic crash on the bond markets has already happened, the valuation corrections have already taken place and inflation is likely to be close to its peak," says Schallmayer.

"In such an environment, it is often worth taking an anti-cyclical approach to the stock market."

In Germany, he expects the gross domestic product to fall by 1.6 percent in 2023, but not a global recession.

“The global glasses are currently more helpful when looking at the prospects of the stock market than the German glasses, which are characterized by fear of a lack of gas.” Deka expects 12,000 Dax points at the end of the year, with deductions of 1000 points in between and then 14,500 points all at once Year.

Schallmayer considers the search for the low point for entry into the stock market to be of little help.

Illusion of optimal timing

Markus Reinwand, Helaba's stock market strategist, also warns against this: "Investors should give up the illusion of being able to get the low to get started," says Reinwand.

"Recovery is often quick and if you miss the first moment, you will have difficulties later." He advises asking yourself the fundamental question of whether the risk-reward ratio on the markets is good.

Reinwand currently thinks it has at least improved.

"Prices have already priced in a lot of the current risks, so I would use any downside to build positions."

Uwe Streich, equity strategist at Landesbank Baden-Württemberg, explains that the stock markets can go much lower using a chart that shows the Dax in comparison to the book value of the Dax companies.

"In the worst case, in a final sell-off, which we have not seen so far this year, it can sometimes go one to three days below the book value, currently below 9700 Dax points." Streich emphasizes that the current rating with a Dax price-earnings ratio of less than 10, was only lower on 6 percent of all days in the history of the Dax.

"Getting involved now is highly attractive, our model allows us to expect an annual return on shares of 11.5 percent over the next five years," says Streich.

The entry point could be even cheaper.

Streich only expects the Dax low in the first few months of 2023.

Manfred Bucher, equity strategist at Bayern LB, emphasizes positive aspects that are currently being overlooked on the market.

The cheaper crude oil is helping to ease the situation, as is an improvement in the supply chains and weak economic indicators such as the Ifo business climate index are now being well digested by the markets.

"In a worst-case scenario, there would still be some room for improvement, but there are already good signs of turning points and valuation levels are attractive," says Bucher.

Above all, he would rely on companies with market power, which as global players are currently able to pass on the rising costs to customers via higher prices.

Volker Sack, stock expert at Nord LB, refers to larger share purchases by American investors in Germany: "The strong dollar makes the Dax cheap from an American point of view." He sees 11,000 Dax points as a lower limit, but also room for improvement to 15,000 points .

Markus Reinwand from Helaba expects the Dax to even reach 15,700 points in a year and emphasizes the positive effects of inflation on companies: "Many companies can currently charge significantly more for their products."