It’s time to sell German stocks: Sara Sjolin

It’s been a stunning 2015 for Germany’s DAX 30 index, but if you want to bank the most profits, now is the time to sell, according to Société Générale analysts.

The index has logged 26 record closes since New Year’s, is up 23% year-to-date.

“Take profits on the DAX index after the strong rally,” they noted in a report published on Friday. “The DAX index already looks overbought long term and is approaching a sell zone at nearly 12,000 points.”

The benchmark closed above 12,000 for the first ever on Monday as slumping oil prices lowered production costs for the energy-consumption heavy German industrials, the multiyear low for the euro made exports cheaper for overseas buyers and the European Central Bank’s aggressive easing program pumped up equity prices across the region.

But the DAX is set to struggle to cruise above the 12,000 level. According to the SocGen forecasts, the benchmark will drop to 11,000 in the second quarter of 2015, before bouncing back to 12,000 by the of the year.

Instead, they advised to pile into Italy’s FTSE MIB and France’s CAC 40 index as both are likely to “benefit from accelerating reforms in the respective countries.”