Dry bread makes for rosy cheeks

Nervousness crawled onto the trading floor in the course of the 2007 stock-market year and increasingly spread dank restlessness as well as hot flashes. The much-touted subprime crisis in the USA was the decisive cause of all this: the loan market for borrowers with a low credit rating collapsed virtually over night. Subsequently, volatility on the stock markets increased by up to 50%, to levels which had last been posted in 2003. Nevertheless, the world’s major leading indexes are defying the ups and downs of the stock exchanges with an orderly measure of stamina. Various all-time highs even led intermittently to the fifth bull-market year in a row. Sentiment and prices somehow did not want to dovetail: the markets went crazy.

Haunting questions ruin sentiment

Fears were rampant following several years of bubbly enthusiasm: how many write-offs and allowances for doubtful accounts will still follow in the banks’ balance sheets? Can the USA avoid a real recession? How high can the price of oil climb after reaching a record level of almost 100 dollars a barrel in 2007? Will the euro climb still further and thus burden Europe’s export-dependent economy? Questions upon questions which still cheerfully haunt the trading floor in 2008.

DAX moves ahead of the world’s stock markets

It is a fact: technology and blue chips boomed once again in the past year, at least in Germany. Solar-energy stocks and the semiconductor manufacturer Aixtron, for example, led the TecDAX (+30.2%) with a three-digit price increase. The beneficiaries of global investments, such as Volkswagen (+88.7%) and MAN (+61.6%), were the top performers among DAX stocks (+22%). In comparison, the EURO STOXX 50 (+7%) and the Dow Jones (+4%) looked somewhat less impressive, due in part to the buffeted financials. Germany’s MDAX (+4.9%) held up well in view of the sweeping exodus of mostly institutional investors who were afflicted with potential liquidity concerns. For the same reason, the SDAX (+6.8%) was hit hard. Circumstances were even worse with regard to the European real estate index EPRA (-34.1%), which suffered above all from the slide in equity prices among Spanish, Italian and British real estate stocks.