FRANKFURT (DEUTSCHE-BOERSE AG) - Despite the political shifts, many German (and European) blue chips are holding their ground - which makes the situation more uncertain, as Goldberg interprets.

June 20, 2024 FRANKFURT (Goldberg & Goldberg). It actually took a few days for French President Emmanuel Macron's decision to call early elections to be reflected in share prices here in Germany. After all, our last sentiment survey showed an increase of 0.9% before the DAX suffered a significant setback of 3.7% at times over the weekend. And at the time of today's survey, the situation of the Borsen barometer has hardly improved - in the end, we had to record the fifth consecutive weekly loss of -2.1%.

Meanwhile, sentiment among the institutional investors we surveyed with a medium-term trading horizon has hardly changed week-on-week. Our Borse Frankfurt Sentiment Index fell by just 2 points to a new level of -5, with a few previously neutral players moving to the short side.

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However, this does not necessarily mean that there has been very little activity among investors since last Wednesday. As can be seen from another sentiment survey from last weekend, for example, investor sentiment is likely to have temporarily deteriorated considerably.

Buying into weakness

Among private investors, however, there is a slight trend in the opposite direction. In this panel, the Borse Frankfurt Sentiment Index rose by 4 points to a new level of +9, as the bear camp fell by 3 percentage points. There was obviously some profit-taking there, and a very small minority even dared to join the bull side. The result of the survey of social media participants within the group of private investors differs from this. Their optimism has decreased compared to the previous week.

On balance, therefore, the interim slump in the DAX has not caused a change in sentiment among many investors compared to the previous week. And European equities also appear to remain popular among international fund managers. This was conveyed by the Bank of America survey published yesterday, although it was completed last Thursday. Even though investors are reportedly less optimistic this month about the prospects for further price gains in European equities and French stocks currently appear to be among the least popular in the eurozone, the picture is quite different in a global context.

International fund managers are still holding on to the eurozone

According to the survey, 30 percent of asset managers stated that they were overweight in eurozone equities overall. This is not only the highest level since January 2022, but also represents an increase of 12 percentage points compared to the previous month. (In comparison, only 7% of global fund managers were recently overweight in the US on balance).

However, it can be assumed that at least some international fund managers have sold their European investments since last Thursday. The fact that the DAX has not risen convincingly since last Friday's low, despite the small net change in positions by domestic investors, suggests that there may have been some outflows by long-term investors.

However, those who are betting on a broader DAX recovery - and international investors are likely to be among them to a large extent - should be rewarded for their courage as soon as possible, although some would probably be satisfied with a rise to 18,500/550. Overall, the situation is not favorable for the DAX, especially if there are significant long-term capital outflows.

By Joachim Goldberg

June 20, 2024, © Goldberg & Goldberg for boerse-frankfurt.de

(Deutsche Borse AG is solely responsible for the content of this column. The articles are not an invitation to buy or sell securities or other assets).