The situation is also positive in the domestic economy. Unemployment in Germany is much lower than the European average. Consumer sentiment is improving month-on-month and the German real estate market is also progressing well.
German companies are considered innovative, efficient, solidly financed and their products are highly regarded by their international clientele. German exports now account for more than 50% of the total economic output and this coming year is set to add more dynamic growth.
With good reason, German equities remain the true first choice. The DAX Index is currently valued at a moderate PE ratio of 12. This remains an unjustified markdown in terms of history as well as in comparison to other global equity markets.
In addition, the average dividend return of the 30 largest German companies is 3.3% and, as such, is considerably higher than the 1.51% return offered by 10-year German Federal bonds. German medium-sized companies are a powerful economic factor, something which the rest of the world would dearly like to have. Many German second-tier stocks in the MDAX, TecDAX or SDAX are therefore worth considering as a long-term investment.
When the eurozone economy stabilises, many foreign investors will regain confidence and will increasingly turn to German equities. As well as this, many institutional and private investors find themselves in a genuine investment emergency as a result of low interest rates and high liquidity.
Consequently, funds could progressively be restructured from the money and bond markets into German quality stocks. It should therefore only be a matter of time before the DAX reaches the 9,000 mark, even if short-term price corrections are possible at any time. These can be viewed as supplementary buy opportunities.
