Wirecard shares continue to fall

Dusseldorf There is no uniform trend on the German stock market. After a weak start with 12,172 points as a daily low, the Dax turned positive. But in midday trading, the index slips again 0.5 percent into the red and is traded at 12,273 points. Last Friday, the leading German index closed 0.4 percent firmer at 12,330 points.

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. 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. “

No wonder that the Wirecard share price almost halved on Monday at the opening of trading. The daily low is 12.99 euros. The paper is currently trading at EUR 15.90, a drop of 38 percent. 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.

The data on how the positions changed on Friday was released on Monday. According to the latest information, 15.2 percent of the shares are in the hands of short sellers – this is the highest value in the three German indices Dax, MDax and SDax.

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 27 cents per euro. In return, the bond yield rose to over 37 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. According to information from the Handelsblatt, a meeting between Thiele and Federal Finance Minister Olaf Scholz (SPD) is planned for this Monday. Lufthansa CEO Carsten Spohr will also be there.

The goal: The framework conditions for state aid should be improved. Nobody knows whether that will be enough to satisfy Thiele.

The situation for the stock 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.

The share was the frontrunner in the Dax last Friday with a gain of 3.1 percent, the trading volume increased slightly to around 14.6 million.

On Monday, the stock slipped 5.4 percent. The complex situation is too uncertain, as investors prefer to sell their Lufthansa papers and wait for a decision.

But what the two papers probably have in common: Wirecard is likely to follow Lufthansa’s Dax relegation, which slipped into the MDax this Monday, after the next index review in September.

The Fear of a rejection of the government bailout package by Lufthansa shareholders triggers a sell-off in the airline’s bonds. This drives the yield on stocks expiring in September 2024 to 6.177 from 3.973 percent. But that’s not a comparison to the 37 percent return at Wirecard.

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 temporarily fell by almost six 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” rose by just under one percent to $ 1,758 per troy ounce, which is only about six dollars 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.

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.

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