The DAX index has gained 12% since the beginning of the year and hit a new all-time high in mid-June. The positive dynamic is supported by expectations of rising corporate revenues and profits. According to consensus estimates, company revenues are expected to rise by 4.5% this year, and next year, by 3.2%.
As regards profit trends, consensus estimates predict a rise in profits by 13.2% for this year. The outlook for 2018 is also positive for corporate earnings, with estimates placing the gains at 7.6%. Therefore, the stock market should continue to receive support from the positive fundamental data. An important argument in this context is also the fact that market valuation is moderate. Estimates for 2017 place dividend yields at 2.8% and the P/E ratio 14.3x lower than that of global stock markets (17.5x).
Yields on ten-year German Bunds are expected to remain within a narrow bandwidth of 0.2 to 0.5%. Under these conditions, the stock market is expected to continue posting moderate gains.
Author:
Hans Engel
Senior Analyst Global Equities
Erste Group Bank AG
14 June 2017
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Note
Wiener Börse AG would explicitly like to point out that the data and calculations given in this report are historic values, which do not permit any conclusions as regards future developments or value stability. Price fluctuations and loss of capital are possible in securities trading. The contribution is the personal opinion of the analyst and does not constitute a financial analysis or a recommendation for investment by the exchange operating company, Wiener Börse AG.