Dusseldorf The leading German index is almost 0.6 percent weaker from trading and ends the trading day at 12,262 points. At the beginning of the week, the German stock market showed no tendency. After a weak start, the Dax temporarily turned positive, but then gave up its profits.
Such a course corresponds to the general market mood, which can be described as neutral. According to the weekly Handelsblatt survey Dax-Sentiment, there is no particular pressure on the market, presumably there will be no major fluctuations in the coming days, but rather a sideways trend.
But The situation is completely different for the individual values in the leading German index. There is an unusual situation in the Dax: with Wirecard and the former member Deutsche Lufthansa, large corporations from two different industries are in a financial crisis. However, the similarities between the two companies end there.
At Wirecard, 1.9 billion euros have disappeared, which should actually be in the trust accounts of two banks in the Philippines. The sum corresponds to about a quarter of the balance sheet total of the payment service provider. In the meantime, the search for money has apparently been abandoned. In a statement, the Wirecard board announced early Monday morning that the escrow accounts “with a high probability” do not exist.
With regard to the stock market wisdom: “The money is not gone, only someone else has it”, asset manager Markus Schön asked on Sunday differently: “It is not about whether someone really has the money, but rather whether it is was ever there. “
In the meantime, BaFin boss Felix Hufeld has self-criticized. In addition to the management of Wirecard and the auditors, criticism of the Bafin is justified, said Hufeld. “Many private and public institutions, including my own, were not effective enough to prevent this from happening.”
On Monday afternoon, the Wirecard supervisory board also drew further consequences from the balance sheet scandal and immediately dismissed board member Jan Marsalek and extraordinarily terminated his contract of employment. Marsalek had been suspended since last week, until then he was responsible for day-to-day operations, including Southeast Asia, where the affair started.
In addition, the head of the Bank of the Philippine Islands (BPI), Cezar Consing, also spoke to the Reuters news agency on Monday about the alleged bank confirmations for trust accounts from Wirecard at the Philippine bank BPI.
According to Consing, the confirmations are a clumsy forgery: “When we were shown the so-called certificate, it was very clear that it was wrong.” Wirecard money never ended up in bank accounts.
The rating agency Moody’s has now completely removed Wirecard’s credit rating. Already on Friday, Moodys’s had downgraded Wirecard’s credit rating by a whole six levels to junk level.
No wonder the Wirecard share price goes down 44 percent lower on Monday. The paper closed at EUR 14.44 at the close of trading. As a reminder, the stock lost 71 percent last Thursday and 35 percent the following Friday.
There is only one comparable price drop in the Dax history. That was the share of real estate financier Hypo Real Estate, which lost around 73 percent of its value in the wake of the financial crisis. The company was then saved with state funds.
That shouldn’t work at Wirecard. The company is not systemically important, and a takeover by a competitor or financial investor is also unlikely. Which company wants to take on such balance sheet and process risks?
Hedge funds are among the winners of the Wirecard disasterwho have so far achieved very high book profits with their bet on falling prices. And a look at the current data shows that they even consider bankruptcy to be possible.
There is no other way to explain their behavior. Because, according to the Federal Gazette, five hedge funds raised their bets in the course of Thursday, two more opened new positions.
On Friday, three more hedge funds expanded their bets, four lowered their positions. The share of shares held by shortsellers fell from 15.2 to 13.92 percent – this is still the highest value in the three German indices Dax, MDax and SDax. The data on how the positions have changed this Monday will not be published until Tuesday.
In fact, the value is likely to be much higher. Because only positions are published in the Federal Gazette that exceed the publication threshold of 0.5 percent of freely tradable shares. But there are likely to be many smaller positions. According to S3-Partners, more than 30 percent of the shares were “short” on Friday.
Also The picture is similar on the bond market. The price of a bond that runs until 2024 continues to fall and is still trading at 26 cents per euro. In return, the bond yield rose to over 38 percent. For comparison: On average, the yield on bonds from European companies that have a triple B rating like Wirecard is 1.1 percent.
All of this leaves investors like Frank Thelen in despair. He had held Wirecard shares, but had now lost confidence in the company. He is self-critical: “Shares are always risky, but I didn’t see the second largest tech group in the Dax apparently not clean.”
The situation at Lufthansa is completely different: The Dax group was supposed to be saved by the state with nine billion euros, as were the almost 140,000 jobs. And the taxpayer should still achieve a respectable return. But doubts are growing that the rescue of Lufthansa in this form can become a reality.
The Munich entrepreneur Heinz Hermann Thiele has the fate of Lufthansa in his hands with his share of 15.52 percent. The federal government has now apparently not promised the major Lufthansa shareholder any changes to the state rescue package for the airline.
“The federal government has explained the aid package,” said two government representatives on Monday of the Reuters news agency after a meeting that Thiele and Lufthansa CEO Carsten Spohr met in Berlin with finance minister Olaf Scholz (SPD) and economics minister Peter Altmaier (CDU).
Both sides have stated their positions, said one of the insiders. “We had a friendly conversation,” said Scholz. Thiele left it open whether he will vote against the plan at the extraordinary general meeting on Thursday. Uncertainty about the future of the airline caused Lufthansa shares to go down 3.2 percent less on its first day of trading after the Dax 30 relegation.
Because the situation for the share is complicated: For one thing, hedge funds continue to speculate on falling prices and increased their bets last Thursday. According to the official information from the Federal Gazette, the rate is at least 9.64 percent. And thus in second place behind Wirecard.
But you don’t know how Thiele will behave. He most recently sold Knorr Bremse shares for presumably 700 million euros for further private investments. Will he buy more Lufthansa shares? If so, he or she is required to report again from a participation of 20 percent.
What the Lufthansa and Wirecard papers probably have in common, however: Wirecard is likely to follow Lufthansa’s Dax decline, which slipped into the MDax today, after the next index review in September.
In contrast, the shares of the flavor and fragrance manufacturer Symrise reached in the morning a new record high at 100.70 euros, However, 0.9 percent fell into negative territory at the close of trading.
The shares of the special packaging manufacturer Gerresheimer, which have been a member of the Stoxx Europe 600 since Monday, also went out of hand with an increase of almost 2.8 percent. The share certificates of the Hellofresh cookbox supplier made a jump of 5.2 percent up to the close of the stock market and at times reached a new record at 44.50.
The authorities are also targeting Glencore . The Swiss public prosecutor’s office launched criminal investigations into alleged disregard for anti-corruption measures. The judiciary in the United States and Great Britain is also taking action against the mining group.
In all three cases, it is unclear how long the investigation will take and what penalties there will be, stated analyst Ban Davis from the investment bank Liberum. Glencore titles slipped 3.3 percent.
Look at other asset classes
The fear of a second wave of coronavirus infections is driving further investors in the “safe haven” gold . The “anti-crisis currency” rises by around one percent to over $ 1,760 per troy ounce, which is only just below its seven and a half year high in May.
The proximity to this high should attract additional buyers, says Commerzbank commodity analyst Carsten Fritsch. In the early evening, the gold price dropped slightly to $ 1,758.
Apparently, the situation is also changing on the gold market. Low interest rates in the US and an expansive monetary policy by the US Federal Reserve, according to John Reade, chief strategist at the World Gold Council, the gold industry’s main lobby organization, have led financial investors to bet heavily on futures markets for rising gold prices.
Instead, however, inflows into physically backed gold index funds have been rising for weeks. From Reade’s perspective, this could be a sign that investors are turning away from futures exchanges because banks have become more reluctant to oppose these bets. Investors then switch to gold index funds, Reades said.
This is a development that could also fundamentally change the dynamics on the gold market. Because leveraged bets on the futures exchanges are usually shorter-term than investments in gold ETFs. If investor demand shifts to less volatile gold ETFs, volatility in the gold market could decrease, Reade said.
What the chart technique says
The Dax appears to be testing the upside gap of the past trading week on today’s trading day. That lies between the index levels of 11,968 and 12,133 points. Because the daily low from last Tuesday (12,133 points) was above the daily high from Monday of the past week. Such upward price gaps are often interpreted as a sign of further rising prices and are an important area of support according to chart technology.
On the upside it is noticeable: the Dax has risen above the 12,400 mark several times in the past trading days, but then slipped again quickly. There is now a short-term resistance.
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.