Dusseldorf The leading German index closes 0.4 percent firmer at 12,330 points and thus ends the week in a conciliatory manner. The stock market index was unable to defend its daily high of 1.4 percent, but a gain of more than three percent remains over the week. Hopes of further economic stimulus and the backing of central banks for the financial markets are the main reasons for the successful course of the week.
Once again, the focus was on the Wirecard share. After the dramatic price losses of the previous day, things continued to go down on Friday: At the top, the paper fell by another 50 percent to a daily low of EUR 19.26. Previously, NordLB had lowered its target price from 80 to 20 euros.
First the CEO Markus Braun resigns made the price rise again. At the close of the stock market, the paper was 35.3 percent in the red – at around EUR 26.
The paper had already made for a historic trading day yesterday: the trading volume of the Wirecard share, which fell by more than 70 percent, was 40 million papers. For comparison: With all 30 DAX values taken together, a total of 102 million papers were traded on Wednesday.
On Friday, the evidence of a large-scale fraud case around the Dax group, which fueled the further drop in prices: The Philippine bank BDO Unibank, which allegedly held one of two suspicious trust accounts for Wirecard, said that the German company had none Customer.
“The document, which claims the existence of a Wirecard account at BDO, is a manipulated document that bogusly signs bankers,” said the statement from the Southeast Asian money house in the city of Makati. “The case has been reported to the Central Bank of the Philippines.”
The balance sheet scandal centers on two Asian banks and a trustee who has been managing accounts for Wirecard since the end of last year. The accounts reportedly had 1.9 billion euros posted. However, the auditors working for Wirecard now doubt that these 1.9 billion euros actually exist.
On Friday evening, the fund company DWS announced that it would sue Wirecard and the former CEO Markus Braun: “DWS will sue Wirecard and Markus Braun personally,” a DWS spokesman told Handelsblatt. The spokesman did not want to specify what exactly DWS wants to file for a lawsuit. But it should be primarily about compensation.
In the meantime, the first figures have been published in the Federal Gazette of how the hedge funds behaved during the price slide of more than 70 percent on Thursday yesterday. The surprising answer: The massive loss of course is obviously not enough for them.
Because they drastically increased their short sale rate on yesterday’s trading day. They have not, as one might have expected, reduced the value by buying back shares.
Because one such short speculation follows the following pattern: First, short sellers, for example, borrow shares in a company from investment funds and sell these papers. In order to return these shares after the deadline, you have to buy them again beforehand – of course at a lower price if possible. The fall in the share price caused many losers, but also some winners.
This quota is now now almost 17 percent, as emerged from data from the Federal Gazette on Friday. On Wednesday, it was 9.96 percent of all freely tradable shares. The funds sold yesterday, according to the – not yet complete – figures the equivalent of another five million shares. As of Thursday, they have to buy back a total of 17.3 million shares.
The course of the day yesterday was very volatile. After the announcement at 10.44 a.m., Wirecard shares slipped from 95 euros to 35 euros (11.08 a.m.) within 15 minutes (interruption of trading already deducted). The intermediate recovery to 64 euros at 11:56 am was followed by the final crash, which ended with a closing price of 39.90 euros.
The extremely high trading volume of 2.78 million units within just 15 minutes of the announcement suggests that hedge funds have increased their short selling rate.
But the question is: Who made sure that the prices rose from EUR 35 to EUR 64 after the first sale? The trading volume was definitely no longer as high as during the subsequent second sell-off. Which suggests that no big addresses have set the Wirecard course on the rise.
Investors are praising the bond market increasingly bankruptcy from Wirecard. The price of a bond that runs until 2024 plummeted yesterday’s Thursday by more than 40 percent and continues to fall today.
The bond was only traded at 23 cents per euro on Friday. In return for the falling price, the bond yield rose to more than 40 percent.
For comparison: On average, the yield for bonds from European companies that have a triple B rating like Wirecard is 1.1 percent. The return on the Wirecard bond is also extremely high compared to companies classified as “speculative”. European high yield bonds currently yield an average return of around 4.4 percent.
But the situation also calmed down with the bond after Braun’s resignation. The price is now 39 cents and the return is 26 percent.
The second Dax share that is the focus of the short sellers is Lufthansa. But the starting point is different. In this case, the hedge funds are dealing with a major shareholder who may want to buy stocks on a large scale.
The entrepreneur Heinz Hermann Thiele, currently the largest single shareholder in Lufthansa with a good 15 percent, criticized the planned rescue package for the crane airline with a volume of nine billion euros earlier this week. Above all, Thiele is disturbed by the fact that the state is getting a 20 percent stake in the company, at a share price of just 2.5% of the current Lufthansa share price at EUR 2.56.
He reacted on Thursday and sold eight million shares in Knorr Bremse. The proceeds were intended for other private investments by Thiele, it said in a trade announcement.
According to the Bloomberg news agency, the price for the paper sold is said to be 91 euros per unit. The proceeds for Thiele would be more than 700 million euros. The closing price of the Knorr-Bremse share in Xetra’s main business was EUR 95.31 on Thursday. Thiele could use the money to buy a further 15 percent of Lufthansa.
That makes things exciting because hedge funds are also under pressure to buy back shares. Your short sale quota is currently 9.96 percent of all freely tradable shares. You have to buy back the equivalent of 47.6 million shares, the average trading volume is around ten million papers a day.
This news boosted the Lufthansa share, which is trading more than three percent more and is thus the winner in the Dax at the end of the week.
Big expiration day
The large expiry day on Friday, also called the Witches’ Sabbath, had little impact on trade. Then futures and options on indices and options on individual stocks expire. There were no major course swings at the Dax.
The settlement price for DAX options was set at 12,423 points on Friday. For MDax and TecDax, the settlements were 26,347 and 3002 positions, respectively. The options on the Euro Stoxx 50 expired at a rate of 328 points and those on the Stoxx 50 at 3061 points.
What the chart technique says
The starting position has not changed since yesterday’s trading day: the upside gap from the beginning of this week (11,968 to 12,133 points) remains the first important area of support. Specifically, the upward price gap means that the daily low on Tuesday was above the daily high on Monday. This is interpreted as a sign of further rising prices and is an important area of support according to chart technology.
The 200-day average line, which currently stands at 12,149 points, is also listed in this area. This line is an indicator of the long-term trend.
On the top side it is striking: The Dax does not manage to sustainably exceed the 12,400 point mark. Also on Thursday, the Dax quickly slipped again after rising to 12,483 points. This area must be overcome in the long term for further price increases.
Here is the page with the Dax course, here are the current tops & flops in the Dax. Current short sales by investors can be found in our short sales database.