China is increasingly decoupling from the global economy

Beijing, Berlin, Düsseldorf Mostly once a year, China’s head of state and party leader Xi Jinping gives a speech to high-ranking ministry and provincial leaders at the Central University of the Communist Party, which sets the course for the year. But this time it had a special meaning. Because the five-year plan is currently being finalized, which should set the course for the economy in the People’s Republic from March to 2025.

Foreign company representatives may not have liked what Xi said behind closed doors earlier this week. “The most essential feature of building a new development pattern is to achieve a high level of self-sufficiency and self-improvement,” says Xi. ”

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Why the Dax can rise to 15,000 points in 2021

The Frankfurt Stock Exchange

DAX investors can look to the year 2021 with optimism.

(Photo: Reuters)

Düsseldorf Weak USA, robust Europe: The start of the year on Wall Street, where technology stocks disappointed, and the stable quotations in Germany and neighboring countries give a foretaste of the entire stock market year. At least that’s how the experts at Frankfurt-based financial data specialist Sentix interpret it in their outlook for 2021.

After the strong previous year with all-time highs on the stock markets, they anticipate a “challenging” year 2021 – and more difficult conditions in the USA. According to the forecast, the Dax is waving significantly higher prices in the second half of the year after ups and downs in the first few months.

Many banks share the optimism for the Dax – but not the skepticism for the USA.

The observer’s confidence is based on several considerations. Furthermore, low interest rates and the therefore less attractive alternatives to investing in shares will drive investors’ willingness to buy and thus the stock exchange prices.

The conditions

In addition, there is an optimism that feeds on developments in the vaccination industry. The longing for a return to normal is great, as is the confidence of many market participants that this will succeed.

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Where financial market risks are building up in China

Thunderstorm over Beijing

The Chinese financial market could face a tough test.

(Photo: dpa)

Peking In China, things are happening that have long been considered impossible: in quick succession, several large state-owned companies have had to admit that they cannot repay their debts on time.

The failures in the bonds made the financial markets startle, because there are quite prominent names among them: In October it was Huachen, the parent company of BMW’s Chinese joint venture partner Brilliance, who issued a bond worth one billion yuan (around 120 million euros ) could not repay.

In November, the state-owned mining company Yongcheng Coal and Electricity Holding Group fared similarly. In a third case, Tsinghua Unigroup, a chip manufacturer supported by Beijing’s renowned Tsinghua University, was unable to repay two bonds on time.

These are no longer isolated cases: In the first ten months of the year, according to calculations by the Fitch rating agency, there was a record loss of 40 billion yuan (around five billion euros) on bonds from state-owned companies.

Experts believe there will be even more tremors in the next few months. “We will see increasing refinancing and repricing risk for weaker state-run firms, which will lead to increasing default rates,” said Andrew Chan, analyst at Bloomberg Intelligence. “We believe that bailouts are unlikely as China aims to restructure, consolidate and eliminate zombie-like state-owned companies unless it creates systemic risk.”

The Chinese financial market could still face a tough test. Because more are being added to the problems in the bond market: The enormously high debt level of local governments and private consumers, which rose further in the corona crisis, the unregulated shadow banking market and, above all, the ever-expanding real estate market are also worrying Chinese supervisors.

Under the influence of the pandemic, old and new problems would have mixed together, warned Guo Shuqing, director of the China Banking and Insurance Regulatory Commission (CBIRC), in a policy essay in early December.

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France wants to win back industrial jobs

Closed manufacturer in Donges near Saint-Nazaire

No other EU country has relocated industrial jobs abroad on such a large scale as France.

(Photo: AFP)

Paris Thick black smoke from burning car tires and hundreds of unionists in red vests greet Emmanuel Macron. Shortly before the second presidential election, he rushed to Amiens to hold discussions with workers at a Whirlpool plant. 650 livelihoods are at stake because the group no longer wants to have clothes dryers manufactured in France, but in Poland. After heated arguments, the candidate finds it difficult to get his message across: “I don’t promise you that I can save your jobs, but I will fight to ensure that your children get a better education.”

Eleven days later, Emmanuel Macron was elected president. The vocational training reform is one of the most important changes it has achieved. That didn’t help the Whirlpool employees: 86 people are still working there after two takeovers. The prefecture announced a few days ago that there is a risk of permanent closure.

The Amiens plant would be another stop in a long ordeal for industries that have gone bankrupt or turned their backs on France over the past 40 years. But without strong industry – as the corona crisis shows in particular – a country is not resilient. They are less able to defend their health systems and often simply lack the resources to fight against external and internal shocks.

“France is among the major industrialized countries that has suffered the greatest deindustrialization in the past few decades,” France Stratégie, the prime minister’s think tank, states in an analysis of several hundred pages. Since 1980 the industrial sectors have lost half of their employees and 2.2 million jobs have been lost.

In 2018 and 2019 industrial employment rose again for the first time. “But the Covid crisis fundamentally calls this trend into question,” said the economists of the report. The share of industry in gross value added in France is 13.5 percent. In Germany it is 24.3 percent, the EU average almost 20 percent.

France has become the “European champion in delocalization” over the years, is the second important finding of France Stratégie. No other EU country has shifted industrial jobs abroad on such a large scale in order to react to disadvantageous cost structures. While Germany exported goods, France exported entire branches of industry.

graphic

A shrinking industry has negative economic, social and political consequences. In industry, productivity is growing faster on average than in other sectors. In France, industry accounts for more than two thirds of private spending on research and development. As their weight decreases, their growth and thus their ability to generate income decrease.

A chronic trade deficit is building up. The transferred income from investments abroad only compensates for this to a limited extent. And they encourage an uneven distribution of income, because they primarily benefit the wealthy. Ultimately, entire formerly flourishing regions are deserted, whose population feels disadvantaged and votes right-wing populists in protest.

Germany exports goods, France industries

Nicolas Sarkozy, and after him François Hollande, recognized the problem. “I want to secure industrial employment in the long term,” said Sarkozy in 2010. The conservative president issued a “large national bond”, of which 6.5 billion euros should benefit industry. For many French, however, deindustrialization remained a statistical phenomenon or even an expression of modernity for a long time: the country was changing into a service economy faster than Germany, it was said.

But then Corona came. With the pandemic, the carelessness is gone. Since the spring, the French have been disturbed by the fact that one of the largest economies in the world cannot produce enough ventilators, that the most important drugs have to be imported from China and that there is not even the ability to produce sufficient quantities of the reagents for corona tests.

Macron reacted immediately: “The re-localization of production is the most important lever to secure our sovereignty,” he said in June when visiting a factory of the pharmaceutical company Sanofi. France must be able to produce strategic goods domestically or in Europe again. He promised 15 billion euros in order to achieve the return of the outsourced jobs and skills.

graphic

Economy Minister Bruno Le Maire and State Secretary Agnès Pannier-Runacher have now honored 31 companies that they consider to be exemplary. 680 million euros in investments would be mobilized, 150 million euros of which from the state. 4000 jobs would be secured, “1800 new ones should be created”, says Pannier-Runacher. How many of them return from abroad, their spokesman did not want to say when asked.

France Industrie emphasizes two crucial weaknesses: Because of high costs, the competitiveness of the industry has been destroyed for decades. Not through excessive wage increases, but through a toxic cocktail of high, income-independent taxes and very high social security contributions.

Only medium quality level

The second weakness: Instead of switching to products that are of higher quality and contain more technology, the industry has remained on average at a medium quality level and has sought salvation in the relocation of jobs to low-wage countries. Patrick Artus, chief economist at the Natixis investment bank, likes to sum this up in the following sentence: “France produces goods at Spanish technology level, but at German prices.”

Will France remain in search of lost industry? Hollande introduced tax incentives for research and the reduction of labor costs. Macron has made other important corrections, as the upward trend in industrial employment in 2018 and 2019 shows. One can only hope that he will catch up with them after the Covid crisis.

More: Read here what the new corona restrictions mean for the economy in Germany

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That means the free trade zone for German companies

New BMW cars in China

The automotive company expects the new RCEP free trade agreement to have direct effects. “That will have consequences for our production network,” says BMW Board Member for Production Milan Nedeljkovic.

(Photo: dpa)

Dusseldorf, Beijing, Bangkok, Tokyo Hartmut Schick is looking forward to the new Asian free trade zone RCEP. “We expect positive effects on our business and our competitiveness,” says the CEO of Daimler’s Japanese subsidiary Mitsubishi Fuso Truck and Bus Corporation.

On the one hand, the existing cross-border business in the region, such as the Indonesian market that is important for Fuso, would be simpler. Schick also hopes that an upturn in trade and traffic in the RCEP countries will have a positive effect on the commercial vehicle manufacturer’s sales.

2.2 billion people, 30 percent of global economic output, the most economically dynamic region in the world – the numbers in themselves are impressive. But it’s about more than statistical quantities, it’s also about geopolitics. Because China is without a doubt the central factor in this new economic area, and the USA and Europe are on the outside. That is one of the reasons why many European or American politicians, unlike Hartmut Schick, look at RCEP with skepticism.

Even Chancellor Angela Merkel speaks of increased competitive pressure from Asia as a result of the new agreement. Now, so the calls from the business associations, the EU must also take action – conclude agreements with the Southeast Asian Asean states, with India and above all with the new US government.

Many of the 15 RCEP states have already been linked to one another via other free trade agreements and many trade facilitations through the RCEP, which was negotiated for eight years, lag behind these agreements, especially behind those of the European internal market. But for the first time, the Northeast Asian economic powers China, Japan and South Korea are connected via a free trade agreement.

Together, the three countries account for more than 80 percent of the gross domestic product of the RCEP signatories. The country of origin rules could have the greatest influence. Because suddenly companies in all participating countries only need one document instead of many for doing business.

Will China set the standards in world trade in the future?

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Corona Germany: Corona crisis causes government quotas to rise

comparison

This is how the government quota has developed.

Paris, Düsseldorf André-Marc is lucky: Even if the heart of Paris has become depressingly quiet due to the second lockdown – he is allowed to keep his dark green kiosk on one of the central avenues open. Newspapers are considered “essential necessities” and traders are exempt from lockdown. “Most of my colleagues closed down anyway, they have too few customers,” says the 52-year-old.

Tourists are no longer coming, and there are no walk-ins either: The offices are orphaned, the state has ordered teleworking in many areas. “But I have organized a delivery service for my big customers like companies and embassies, so I’m doing pretty well,” says André-Marc. “In addition, I receive monthly support of 1500 euros from the state ‘Solidarity Fund’.”

This fund has existed since the first lockdown in spring. The French National Assembly has now passed the fourth supplementary budget for 2020 and topped up the fund by eleven billion euros. What companies are missing out on in terms of sales and income due to the state corona requirements should be at least partially offset by payments to retailers and money for short-time work.

The almighty state

The state replaces the private sector – this is not only the case in France, but in almost all economies in Europe. As necessary as the rescue policy may be, from the point of view of the state it is first and foremost expensive. Since the aid packages are financed almost exclusively through loans, national debt is skyrocketing everywhere.

In Germany it has grown from 59 to 71 percent of economic output within a year, in Italy it is now almost 160 percent, France is 116 percent.

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Lagarde warns of a severe recession – and outlines help

Frankfurt Christine Lagarde is not infected by the euphoria that the news about a successful corona vaccine triggered in the markets. On the contrary: At an international central bank conference on Wednesday, the head of the European Central Bank (ECB) highlighted the still great dangers of recession.

The ECB President also referred to the still low inflation in the euro area, which has remained in negative territory “longer than expected”. She did not forget to mention exchange rate effects: The recently rather weak dollar is dampening prices in Europe via import prices.

“It is crucial that there are favorable financing conditions long enough,” she said. Otherwise, they fear, an “exceptional recession” could turn into a “conventional, self-reinforcing recession”. Lagarde stressed that the emergency program known as PEPP to purchase bonds and medium-term loans to banks should play a key role in further supporting the economy.

With this, Lagarde reiterated the message it had given in October that the ECB will expand its expansionary monetary policy in December. She pointed out that the service sector was particularly affected by the restrictions on public life. “Experience has shown that services recover more slowly than industrial production, you don’t travel twice as often in the following year to catch up on a vacation.” In addition, it has been shown that citizens with low incomes are particularly affected, who then have to cut their spending immediately.

Lagarde spoke at the start of the so-called Sintra Conference of Central Banks, which this year did not take place in the Portuguese town of Sintra, but rather virtually. She continued to demand strong economic support from fiscal policy. In doing so, Lagarde repeatedly indicated the close connection between monetary and financial policy. On Thursday, she will also appear on a panel with Fed chief Jerome Powell and Bank of England chief Andrew Bailey.

Because private households could consume little in a lockdown, it is important to create favorable conditions for public finances as well. In addition, it is important to prevent state borrowing from leading to insufficient funds for the private sector.

Both arguments provide a justification for the fact that the ECB is helping the governments of the euro zone by purchasing government bonds.

Experts agree that monetary policy will remain expansionary. And that applies even more to Europe than to the USA. Robin Brooks, chief economist of the major bank organization IIF in Washington, deduces from the development of the markets that investors see the euro countries as laggards of the recovery. He recently tweeted: “The sell-off is driving yields up all over the world with one exception: the euro zone. The markets are pricing in more permanent damage there. ”

In addition, the development of a recovery, which is initiated by the availability of vaccines, was the base scenario of most central bankers anyway. The fact that it is now becoming more tangible is good news – but no reason to deviate from course.

Jörg Krämer, chief economist at Commerzbank, is basically optimistic. According to his assessment, one can now “be much more certain that the gross domestic product of the euro area will again reach its pre-crisis level after the turn of the year 2021 by 2022”. He thinks, also with a view to the strong stock markets: “Actually, the ECB shouldn’t have to relax its monetary policy at the next meeting.”

Because the economy is in lockdown and there may even be a risk of a third corona wave, he does not believe in a strategic shift by the central bank. “In addition, the many pigeons in the ECB Council can point out that inflation is well below its target of just under two percent,” he says, referring to the representatives of a soft monetary policy in the Council, whom he is rather critical of.

Krämer therefore believes that the ECB, as it announced quite clearly in October, the emergency program PEPP, which so far provides for bonds amounting to 1.35 trillion euros, is increasing and offering the banks further cheap loans under the code TLRTO.

Economics remain critical

Dirk Schumacher from Natixis argues in a very similar way: “The ECB was expecting a vaccine to arrive at the beginning of the year. In this respect, nothing fundamental changes in the basic scenario. I would therefore assume that an expansion of the PEPP will be decided in December. ”And Frederik Ducrozet from Pictet points out that the ECB de facto already committed itself to further easing in October.

Because inflation expectations in the euro zone are very low, he believes that the ECB will not increase PEPP but also the APP bond purchase program. While purchases are used quite flexibly at PEPP as an emergency program, APP expires after a fixed volume of 20 billion euros per month. However, the Economic Wise Council has called for PEPP to be discontinued as soon as possible in the course of the economic recovery.

No change in course is to be expected at the other central banks. In the US, the Fed held a relatively uneventful meeting shortly after the election. As part of its change of strategy, it had already announced that it would place more emphasis on full employment than before and that it would temporarily accept inflation above the target value of two percent.

There is no need to act on this, even if inflation expectations are likely to rise a little further. For the USA, for example, the US fund company Blackrock anticipates that the two percent limit could be exceeded in the foreseeable future.

The Bank of England, on the other hand, has just increased its purchase program by £ 150 billion to £ 895 billion. In addition to the global problems, it must also keep an eye on the consequences of the approaching Brexit.

These are the instruments of the ECB:

The ECB is likely to follow suit in December and also ease its monetary policy again. She has several options:

Bond purchases

The most important instrument is currently their bond purchase program PEPP. She decided to do this in March to alleviate the consequences of the corona pandemic for the economy and financial markets. The program is currently limited to the end of June 2021 and amounts to 1.35 trillion euros. Of this, 629.2 billion euros had been exhausted by the end of October 2020.

If the ECB continues its purchases at the current pace, it would be able to get by with the remaining volume until around October 2021. However, many economists expect the program to be extended until the end of 2021 and the volume to be expanded by 200 to 500 billion euros.

In addition to this new bond purchase program, the older APP program to purchase bonds and other securities for 20 billion euros a month will run until at least the end of the year. In addition, this older program allows the ECB to flexibly distribute additional purchases of 120 billion euros over time.

Many economists expect an extension of this program, some also an increase in the monthly purchase volume. With the older program, however, the ECB is less flexible when it comes to purchases. These are tied to the central bank’s capital key, which is based on the size of the population and the economic strength of the euro countries. With the new PEPP program, however, it reserves the right to temporarily deviate from it.

graphic

Cheaper long-term loans for banks

Another possibility would be for the ECB to offer the banks even cheaper long-term refinancing. At the moment, the institutions can call up long-term refinancing transactions with a three-year term from the central bank – called TLTRO III in technical jargon. The interest rates here are extremely favorable for the banks.

In the case of liquidity injections, the deposit rate is used as the interest rate, which is currently minus 0.5 percent. Banks thus receive a premium when they access the cash injections. This can even rise to one percent if the institutions do not reduce their loan books. Here, too, economists expect even more favorable terms for the future.

Rate cut

Another adjustment screw is a possible rate cut. ECB director Isabel Schnabel had mentioned such a step as an option in an interview with Handelsblatt. “Our analysis shows that a further reduction would be possible without getting to the point where it no longer works or even harms,” ​​she said.

The deposit rate, which is crucial for monetary policy and which banks pay for excess liquidity at the central bank, is currently minus 0.5 percent. Even in the corona pandemic, the ECB had refrained from further reductions. According to Schnabel, the economic situation has changed since March, and this will probably also be reflected in the design of the ECB’s instruments.

Economists assume that negative interest rates from a certain level no longer have a stimulating, but dampening effect on the economy, among other things because of negative side effects for the financial sector. In a recent study, ECB economists estimate that this point, where negative consequences outweigh the positive effects, is reached at an interest rate of minus one percent. Accordingly, the ECB would still have some leeway.

More generous allowances for banks

Bank representatives have already warned of a further rate cut. The ECB could also accommodate the credit institutions elsewhere. Some economists expect a more generous structure of the tax exemptions for banks in the case of minus interest.

At the moment, any excess liquidity incurs minus 0.5 percent interest. An exemption from this, however, is an exemption, which currently amounts to six times the minimum reserve requirement of an institution. This multiplier could be increased, for example to eight times the reserve requirement.

More: Lagarde as a crisis manager: This is the balance sheet of her first year.

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Biontech ensures price rise in the Dax

Dax board on the Frankfurt stock exchange after the price jump in midday trading

Investors celebrate the Biontech announcement.

Frankfurt, Düsseldorf The prospect of success in the search for a coronavirus vaccine put investors in high spirits on Monday on the German stock market. In addition, fueled by the US election result, the Dax closes 4.94 percent higher at 13,095 points.

The leading German index posted its biggest daily gain since mid-May. At its peak it had even risen at times by more than six percent.

The reason for this was a report from the Mainz biotech company Biontech, which is about to breakthrough with its potential corona vaccine. Biontech and its US partner Pfizer presented positive efficacy data on Monday from the crucial study with the vaccination. Accordingly, the risk of developing Covid-19 for study participants who received the vaccine was more than 90 percent lower than without the vaccine.

Biontech and Pfizer are the first companies worldwide to have submitted successful data from the study with a corona vaccine, which is crucial for approval. Both stocks rose strongly.

This Biontech announcement has, to put it somewhat exaggeratedly, redistributed the world of the stock market: The winning shares of the corona crisis are among the clear losers on today’s trading day. The share of the food supplier Delivery Hero loses almost six percent, making it the second largest daily loser in the Dax. The shares of the cook box mail order company Hello Fresh have fallen by 15 percent.

On the other hand, the so-called corona loser shares rise significantly. In the MDax, the shares of Lufthansa, Fraport and Airbus increase between 18 and 22 percent. The biggest winner in the Dax is the engine manufacturer MTU with an increase of 16.6 percent. Allianz, Munich Re and Continental also grew in double digits.

Investors are scrambling for financial stocks in hopes of a rapid global economic recovery from the aftermath of the coronavirus pandemic. The European banking index rises by more than twelve percent. That is the biggest price jump in ten years.

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Markets remain optimistic – but that can also be deceptive

New York The markets in New York got off to a surprisingly positive start to trading after the chaotic election night. The technology exchange Nasdaq gained almost four percent on Wednesday to 11,590.78 points. That is the biggest daily gain in more than half a year. The broad S&P 500 advanced a good two percent. The leading index Dow Jones gained 1.3 percent. The European stock exchanges had already anticipated the good mood.

Investment banker Roger Altman couldn’t hide his amazement. “I’m really surprised by the markets,” said the founder of Evercore on Wednesday on the US stock exchange station CNCB. “The markets have rallied in the last few days hoping Joe Biden would win the election. Now the markets are gaining ground because they have the prospect of a shared balance of power. “

Ten-year US Treasuries have also risen, in return their yield has fallen to 0.65 percent. According to interest rate strategist Christoph Rieger from Commerzbank, US bonds are recovering significantly because it is becoming clear that the Democrats cannot rule through. The fluctuations in the bond market were violent: During the night, the yield had risen from 0.9 percent to as much as 0.95 percent.

Investors must prepare for two difficult scenarios in particular: Joe Biden could win the election and become US president, but the Senate would remain Republican. Then, in deeply divided Washington, Biden would have little leeway to push through his agenda. The two trillion dollar stimulus package that he actually wanted to pass quickly would be much smaller.

Experts then expect only around $ 500 billion. The expectation that a smaller package would mean less debt apparently drove the decline in bond yields after it became clear that the choice would not have an immediate winner.

Podcast Handelsblatt Today: Trump vs. Biden – How things could go on now and what that means for the financial world

Another scenario dreaded by investors is a long hangover. That would be the worst result, according to Elliot Hentov of State Street Global Advisors. “In such a climate, no new economic stimulus package will be adopted. That would be bad for stock prices. That would also have a negative impact on companies’ investments. ”In the run-up, many experts feared a major drop in prices in the event of a standoff.

The economy should actually continue to recover in the fourth quarter. In the event of a long election dispute, however, it is conceivable that the economy will weaken further, according to Hentov. US President Donald Trump announced on Wednesday night that he would call the Supreme Court. However, he left his allegations that there was election fraud vague, so that his exact strategy was not yet clear to investors in the early trading hours in New York.

More on the subject:

What is clear, however, is that the “blue wave”, a sweeping victory for the Democrats, which everyone was expecting when the market closed on Tuesday, did not materialize. “The most important interim result of the US presidency competition at this stage is that the likelihood of democratic change has collapsed,” says Didier Saint-Georges, member of the strategic investment committee at the Carmignac fund company.

As in 2016, investors were therefore caught on the wrong foot again. But they seem to be adjusting to it. If the election result is not delayed too long, Wall Street could quickly come to terms with the new realities.

Technology stocks in particular received significant tailwinds. On the one hand, because in a split Congress with narrow majorities in the Senate, they are threatened with less stringent regulatory requirements. On the other hand, they benefit if the economic stimulus package and the economic recovery are less broad, because interest rate hikes will then not be an issue for the time being. “The best scenario now is: Biden in the White House with a Republican Senate,” said a dealer in New York.

Wall Street expert Markus Koch sees tech stocks as the big winners of the US election

Infrastructure stocks and banks, on the other hand, started weakly. Biden had planned large infrastructure investments that will now be smaller. Banks are suffering from the falling returns. Some values ​​that would benefit from an expansion of the infrastructure or a “greener” policy in Biden were under pressure, in Germany for example Heidelberg Cement and Nordex. Credit Suisse experts in Germany are not yet counting on rising share prices, but neither do they fear a slump. Chief strategist Michael Strobaek expects high fluctuations.

One reason for the largely positive reaction could be that investors were reluctant to make the choice. Christian Keller, chief economist at Barclays in London, observed that investors with “real money” positioned themselves cautiously before the election – that is, long-term large investors such as pension funds. “Hedge funds in particular were betting on a specific outcome,” he says.

“The markets react quite rationally,” says DZ strategist Christian Kahler. Deutsche Bank strategist Dirk Steffen says: “From the perspective of the capital market, the narrow choice we have made so far makes major political and economic changes less likely.”

Setbacks possible

The risk of the markets collapsing is not eliminated as long as neither candidate has admitted defeat. The risk of a protracted process or even unrest therefore remains. In this case, says Keller from Barclays, the yen and possibly even the Swiss franc would count as “safe havens”. US bonds are also likely to remain in focus in this scenario as a safe investment, so that returns would come under even greater pressure.

Financial expert Halver: “A win by Joe Biden would also be better for the European stock market”

In the worst case, DZ strategist Kahler sees a lot of potential for setbacks on the market – “depending on how far Trump is now taking his undemocratic behavior announced on Wednesday morning to extremes”. The strategist thinks it is possible that the German Dax, for example, could collapse by almost a fifth if it worsened. For the broad US S&P 500 index, he sees downside potential of up to 15 percent.

A narrow victory for Trump is likely to cause less uncertainty than a narrow victory for Biden – because Biden is probably the better loser. Natixis Investment Managers’ Esty Dwek expects US-China relations worries to re-emerge if Trump wins. She says, “We are already seeing the Chinese yuan weaken in anticipation of a rising US dollar.”

But even after a chaotic interlude, markets should go back to business as usual. Ultimately, the same issues dominated the market as before the election, says Saint-Georges from Carmignac: It is a matter of finding a balance. On the one hand, concerns about economic growth and dealing with the coronavirus played an important role.

On the other hand, government aid packages, the indispensable support of the central banks and the hope for a vaccine against Covid-19 next year are of importance. Taken together, Saint-Georges said it should continue to support large growth stocks and limit risk in bond markets.

Rick Lacaille from the US fund house State Street Global Advisors argues similarly. He expects “a lot of price fluctuations on the stock markets” in the near future. Nonetheless, this shouldn’t really change investment conditions in the next twelve months, says Lacaille. These would be shaped by the course of the pandemic and the historically unique monetary and fiscal policy support measures.
Collaboration: A. Cünnen, A. Rezmer, J. Röder, F. Wiebe

More: Deutsche Bank reportedly wants to end business relationships with Trump.

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Arero World Fund & Co .: An overview of five Mix ETFs

Trading floor of the Frankfurt Stock Exchange

With Mix-ETF investors should be able to cope with short-term fluctuations.

(Photo: dpa)

Frankfurt Everyone would like to have an asset manager for their investment capital: someone who preserves the money and, ideally, increases it silently and steadily, while the owner of the capital does not have to worry about it. Such individual services are reserved for the wealthy. Funds with a mixed portfolio of different types of securities are an offer for smaller investment sums.

They represent a kind of asset management for everyone. However, the fund providers charge a lot of fees for this, despite the often poor earnings. If you don’t want to pay that much, you can take a look at the small range of mixed exchange-traded funds (ETF), which are usually not actively managed. In any case, they are cheaper.

However, not every strategy of this ETF is easy to understand. In addition to ETFs, there are also some funds not traded on the stock exchange that save active management and instead invest automatically according to fixed rules.

“Active fund managers are strikingly often worse than the market in which they invest,” says Ali Masarwah, analyst at the fund rating company Morningstar. In the long-term, there are hardly any managers of the active mixed funds that banking and financial advisors like to sell that outperform their benchmark indices.

With flexible mixed funds, where fund managers invest their customers’ money relatively freely like asset managers, just 1.2 percent of providers on the European market have beaten their benchmark in the past ten years. In the case of balanced funds with a similar proportion of stocks and bonds, it was only 0.5 percent.

There are many reasons for the poor record of active mixed fund managers

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