kathimerini.gr
German Stock Market Booms Despite Recession, Driven by Global Sales
Despite Germany's two-year recession and projected 0.2% growth in 2025, its stock market (DAX) has risen 25% since early 2024, outperforming European peers due to its large companies' significant international sales (20% domestic, 26% Eurozone, 24% US, 18% China).
- How does the German stock market's exceptional performance contrast with the country's economic recession, and what are the immediate implications?
- Germany's stock market, the DAX, has surged 25% since early 2024, significantly outperforming other European markets despite the country being in recession for two years. This performance is fueled by large German companies heavily reliant on international markets, with only 20% of sales domestically.
- What are the potential risks to the German stock market's performance, and how might these risks affect Germany's economic outlook in the near future?
- Threats of reduced global trade due to potential Trump tariffs and a weaker Chinese economy could significantly impact the DAX's performance. The current low valuations of DAX stocks (12.7 times future earnings) might not be sustainable if international sales decline. Germany's economic weakness and the global dependence of its largest companies create vulnerability.
- What are the main sources of revenue for large German companies listed on the DAX, and how does this explain the market's resilience despite the weak domestic economy?
- The DAX's success is decoupled from Germany's domestic economic performance; major companies derive most revenue from the Eurozone (26%), US (24%), and China (18%). While Germany's GDP contracted 0.4% in 2023 and 2024, investors in German stocks have seen a 55% return since 2020. This highlights the global reach of German corporations.
Cognitive Concepts
Framing Bias
The article frames the German economic situation in a way that emphasizes the positive aspect of the stock market's performance, potentially downplaying the negative implications of the country's economic weakness. The headline (if there were one) and introduction likely highlight the stock market's success, drawing attention to the positive story while minimizing the country's economic stagnation. The use of phrases like "the weakling of Europe" is provocative and helps to create a narrative of surprising success.
Language Bias
While the article uses factual data, some word choices subtly influence reader perception. For example, describing Germany as the "weakling of Europe" is loaded language that presents a negative portrayal. The article could use more neutral phrasing, such as "Germany's economic performance has lagged behind other European nations". Similarly, phrases like "the roaring DAX" add emotional weight. Replacing such evocative language with objective data would enhance neutrality.
Bias by Omission
The article focuses heavily on the German stock market's performance while acknowledging Germany's economic weakness. However, it omits discussion of potential contributing factors to the stock market's success beyond international markets, such as government policies or internal economic restructuring. Further, the article doesn't explore the potential impact of this disconnect between economic performance and stock market performance on the German population or its social fabric. The article also lacks diverse perspectives beyond those of the central bank and Deutsche Bank.
False Dichotomy
The article presents a somewhat false dichotomy by implying that the success of German companies is solely dependent on either international markets or the German economy, neglecting the possibility of multiple contributing factors. It frames the situation as a simple choice between two options, while ignoring potential complexities.
Sustainable Development Goals
The article highlights the strong performance of the German stock market (DAX) despite the country's economic slowdown. This indicates that large German companies are performing well internationally, contributing to economic growth, even if the domestic economy is weak. The strong performance of the DAX suggests continued success and potential for job creation in these large companies, thus positively impacting decent work and economic growth, albeit with external dependencies.