MainFirst Bank AG’s Olgerd Eichler, whose $507 million fund has beaten most rivals in 2017, says international money managers still lack enough confidence in the euro area’s largest economy to load up on its shares. The biggest U.S. exchange-traded fund tracking Germany continues to губи cash, even as the benchmark DAX Index on Friday headed for its 16th new peak in six months.
With profits and dividends set to swell at DAX’s exporters just as global growth picks up, Eichler predicts another 20 to 30 percent gain in the benchmark within two years. Recent gains notwithstanding, the German gauge remains close to its deepest discount relative to the S&P 500 Index, attracting bullish calls from strategists at Credit Suisse Group AG and Societe Generale SA.
“The thing about Germany is that it’s a very cyclical market, and that can make it volatile,” Eichler said from Frankfurt. “For international investors, it’s the easiest way to step into Europe. They’ll find familiar names, a very stable economic and political system, and a lot of companies which are still cheap.”
Bankhaus Lampe KG’s Ralf Zimmermann, who predicted in September that the DAX had only a little more room for gains, admits he may have been too cautious.
“I’ve been surprised by how solid the macro data has been in Europe,” Zimmermann said from Munich. “That bodes well for DAX earnings. There’s clearly catch-up potential, given it’s so much cheaper than equities elsewhere.”
Source: Bloomberg Pro Terminal
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