Wednesday, 31 August 2022 Reading time : 3 minutes

Bleak prospects
The German stock index DAX was not spared losses this year either. Since the beginning of the year, the leading index has lost over 19%, reflecting the rather pessimistic outlook for the domestic economy. High energy prices are weighing on households as well as companies and their earnings, geopolitical upheavals are fuelling uncertainty.

Technology, tradition and share price declines
Some stocks in the technology and communications sector have been hit particularly hard. For example, SAP, the global market leader for business application software and with a market capitalisation of over 104 billion euros the second largest share in the DAX, has seen its share price fall by over 30% in the course of the year. Nevertheless, the order books are full and the company is well positioned in high-growth segments such as cloud solutions. For the analysts, the investment case is given - the expectation of rising prices results in a buy recommendation in the consensus.

The shares of the long-established technology group Siemens (-32% YTD) took a similar beating. Despite robust operating business and rising sales in promising areas such as automation technology and smart infrastructure, the company had to report losses in the third quarter. These losses, due to special write-downs, are depressing earnings expectations, but Siemens is still expected to earn billions in 2022 earnings. The analyst consensus seems to agree, with more than three quarters of the ratings assessing the current share price as too low.

The situation is somewhat different for the German communications giant Deutsche Telekom. With over 200,000 employees, the group is the largest telecommunications company in Europe and one of the world's largest mobile operators. The growing EBITDA (whose forecast has already been raised twice this year), the strong market position in Europe and the T-Mobile growth scenario in the USA have been reflected in the share's performance - it rose a good 16% YTD. Nevertheless, the stock is seen as having further upside potential, the current P/E ratio of just under 14 is still well below the DAX average.

Investment Case
Investors looking for exposure to the above stocks, but not ruling out price declines, can generate a guaranteed coupon with a barrier reverse convertible, but still benefit from the defensive barrier mechanism.

Type	Valor	Underlyings	Coupon p.a.	Barrier	Duration (m)	Currency	Subsciption until
BRC	116435535	SAP, Siemens, Deutsche Telekom	12.00%	60%	12	EUR	08.09.2022

  indicative information as of 31.08.2022, 15:30