Monday, 25 November 2024 Reading time : 2 minutes

Following the collapse of the coalition under Chancellor Olaf Scholz, Europe's largest economy is facing uncertain times. In recent days, however, the challenging economic situation has once again come to the fore. In fact, the economic outlook for Germany has deteriorated at the end of the year, as the ifo business climate index, one of the most important leading indicators for the German economy, revealed on Monday. The sentiment in the boardrooms of German companies worsened in November, with the ifo index falling from 86.5 points in October to 85.7 points. The Munich-based economic research institute's monthly survey is based on the opinions of around 9,000 managers in industry and the service sector. 

The Purchasing Managers' Index (PMI) for Germany also points to a further slowdown in economic activity. The PMI fell to 47.3 points in November from 48.6 the previous month, financial services provider S&P Global said last week. This is the fifth month in a row that the closely watched barometer has fallen, with a reading below 50 indicating a contraction in economic activity. 

The coming months are likely to remain difficult, according to the Bundesbank. "The economic downturn in Germany is likely to continue in the fourth quarter," economists predict in their latest monthly report.

For the time being, the German stock market seems unperturbed by the economic weakness. The blue-chip index Dax, which includes the forty largest companies, has gained more than 16% year-to-date. By comparison, the SMI is up almost 8.5% over the same period of time.

The Dax is led by the shares of energy technology group Siemens Energy, which started the year at around EUR 12.00 and are currently trading at over EUR 48.00.

SAP, Europe's largest software maker, is also having a successful year so far, with shares up by around 60% for the year. Deutsche Telekom is outperforming the market, gaining 35%. 

For investors who wish to invest in Swiss francs, our current offering includes a currency-hedged yield enhancement product on German equities.

Barrier Reverse Convertible on German Equities
11.60% p.a. BRC on Siemens Energy, SAP and Deutsche Telekom
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