Silvia Quandt & Cie. AG, Merchant & Investment Banking: In-between the lines - Bernhard Eschweiler
DGAP-News: Silvia Quandt & Cie. AG, Merchant & Investment Banking /
Schlagwort(e): Sonstiges
Silvia Quandt & Cie. AG, Merchant & Investment Banking: In-between the
lines - Bernhard Eschweiler
26.03.2012 / 10:33
---------------------------------------------------------------------
- Official and market forecasts for German growth are rising again
- Domestic demand, especially housing construction, seen as growth engine
- Upward revisions will support positive market momentum
In the second half of last year, we argued strongly against the widespread
pessimism in financial markets. In particular, we did not believe in a
double-dip recession in the US and a Chinese hard landing. Against this
background, we also saw little risk that Germany could get pulled into a
recession despite the drag from the Euro debt crisis. By and large our
view has prevailed. Nevertheless, our 1.5% growth estimate for Germany in
2012 seemed overly optimistic compared to official and market forecasts.
This is starting to change.
Over the last 10 days, three of the five leading German economic research
institutes (IfW, IWH and RWI) raised their growth forecasts for this year
as well as 2013. Market consensus forecasts have moved higher as well.
More revisions from other official and market sources are likely to follow
and will probably point in a similar direction. The only exception so far
is the forecast of the government's expert advisory board (the so-called 5
'Wiseman'). This, however, was not a full-scale review, but a tiny interim
adjustment, which incorporated the weaker data around the turn of the year.
To be sure, our growth outlook is still on the high side. For 2012, the
gap is between 0.2 and 0.9 of a percent. For 2013, however, most new
estimates are approaching our 2+% growth forecast. In terms of the
quarterly profile, this implies that most forecasters still expect some
weakness in the first half of this year. In contrast, we expect growth
already to resume in the first quarter. Our positive estimate for the
first quarter is mostly based on the rise in business confidence
indicators, which imply a return to trend growth. The risk to our view is
that the pick-up will start later than the indicators imply. Industrial
production rose in January, but was still below the fourth- quarter
average. Thus, industrial production will have to rise further in February
and March to validate our view.
Cyclical and monetary shifts
The positive change in German growth forecasts reflects two key
developments:
- First, signs that the global business cycle is regaining momentum. In
the US, the proof is already in the numbers. In most other economies,
rising leading indicators point to a turnaround.
- Second, massive monetary policy support. Most instrumental is the
liquidity support from the ECB, which has prevented a financial
meltdown in Europe and elsewhere. Furthermore, the policy shift in
Emerging Markets, notably China, from tightening to easing provides
real stimulus.
German housing recovery becomes reality
In the case of Germany, the improved cyclical and monetary conditions are
complemented by positive domestic demand fundamentals. This is nothing new
and actual figures have so far disappointed expectations, especially
consumer spending. Still, there is reason for optimism. One area where
positive fundamentals are starting to materialize is construction,
especially for housing. The German housing sector is highly fragmented (by
location, demographics and regulation), yet several developments stand out:
- While population growth has stagnated over the last ten years, the
number of households has increased by nearly 7%.
- Labor market and income dynamics have improved markedly.
- Mortgage rates are at historical lows, both in nominal and real terms,
and banks are happy to lend.
- Discouraged by the financial and Euro debt crisis and worried about
inflation, Germans are looking for 'real' investment opportunities at
home.
- Supply has not kept up with demand. The average housing completion
rate over the last ten years was less than 3 units per 1000 residents.
For the last five years it was barely two, while 3-to-4 units are
needed over time to maintain housing stocks and standards.
- The demand-supply imbalance is likely to increase if better economic
performance in Germany leads to more migration from the Euro-area
periphery.
To be sure, Germany is unlikely to experience a US-style housing boom, but
recovery is no longer a forecast. The Bundesbank reported in its February
monthly bulletin that housing prices rose 5.5% in 2011, after 2.5% in 2010,
which is a notable pick-up from the near stagnation in previous years.
According to the federal statistics office, housing construction permits
rose 22% in 2011. The Ifo institute expects that housing permits will rise
11% in 2012 and another 8% in 2013.
A supplementary development for the construction sector is the fallout from
Germany's new energy strategy. First, new energy efficiency rules for
housing
and tax incentives are leading to investments in insulation and better
heating systems. Second, the replacement of nuclear power through
renewable energy requires massive investments in the energy infrastructure,
which has a large construction component. Against this positive demand
backdrop, Germany's construction sector has some catch-up to do. Since the
mid 1990s, the number of construction companies fell by 45% and the number
of construction workers dropped by 53%. Not surprisingly, the February Ifo
survey reported the first positive balance of responses from construction
firms in over ten years.
Forecast changes to support market momentum
The change in official and consensus forecasts is important for markets,
especially equities. So far, the rally has been driven by better economic
news versus low expectations. The result has been short covering. Actual
trading volumes have been relatively low. Markets have also been torn
between stronger forward looking indicators (e.g. surveys) and softer
backward data (e.g. production figures). The positive forecast revisions
mean that not just the absence of bad news but genuine optimism will push
market sentiment higher. This development is not only happening at the
macro level but at stock levels as well. This is probably not the start of
a lasting bull market, given the broader deleveraging environment, but the
positive forecast revisions imply that the rally has some momentum left.
Disclaimer
This analysis was prepared by Bernhard Eschweiler, Senior Economic Advisor,
and was first published 26 March 2012, Silvia Quandt Research GmbH,
Grüneburgweg 18, 60322 Frankfurt is responsible for its preparation. German
Regulatory Authority: Bundesanstalt für Finanzdienstleistungsaufsicht
(BaFin), Graurheindorfer Str. 108, 53117 Bonn and Lurgiallee 12, 60439
Frankfurt.
Publication according to article 5 (4) no. 3 of the German Regulation
concerning the analysis of financial instruments (Finanzanalyseverordnung):
^
Number of recommendations Thereof recommendations for issuers to which
from Silvia Quandt Research investment banking services were provided
during
GmbH in 2012 the preceding twelve months
Buys: 93 35
Neutral: 56 6
Avoid: 10 0
Company disclosures
Article 34b of the German Securities Trading Act (Wertpapierhandelsgesetz)
in combination with the German regulation concerning the analysis of
financial instruments (Finanzanalyseverordnung) requires an enterprise
preparing a securities analysis to point out possible conflicts of interest
with respect to the company or companies that are the subject of the
analysis. A conflict of interest is presumed to exist, in particular, if an
enterprise preparing a security analysis:
(a) holds more than 5 % of the share capital of the company or companies
analysed;
(b) has lead managed or co-lead managed a public offering of the
securities of the company or companies in the previous 12 months;
(c) has provided investment banking services for the company or companies
analysed during the last 12 months for which a compensation has been or
will be paid;
(d) is serving as a liquidity provider for the company's securities by
issuing buy and sell orders;
(e) is party to an agreement with the company or companies that is the
subject of the analysis relating to the production of the recommendation;
(f) or the analyst covering the issue has other significant financial
interests with respect to the company or companies that are the subject of
this analysis, for example holding a seat on the company's boards.
In this respective analysis the following of the above-mentioned conflicts
of interests exist: none
Silvia Quandt Research GmbH, Silvia Quandt & Cie. AG, and its affiliated
companies regularly hold shares of the analysed company or companies in
their trading portfolios. The views expressed in this analysis reflect the
personal views of the analyst about the subject securities or issuers. No
part of the analyst's compensation was, is or will be directly or
indirectly tied to the specific recommendations or views expressed in this
analysis. It has not been determined in advance whether and at what
intervals this report will be updated.
Equity Recommendation Definitions Silvia Quandt Research GmbH analysts rate
the shares of the companies they cover on an absolute basis using a 6 -
12-month target price. 'Buys' assume an upside of more than 10% from the
current price during the following 6 - 12-months. These securities are
expected to out-perform their respective sector indices. Securities with an
expected negative absolute performance of more than 10% and an
under-performance to their respective sector index are rated 'avoids'.
Securities where the current share price is within a 10% range of the
sector performance are rated 'neutral'. Securities prices used in this
report are closing prices of the day before publication unless a different
date is stated. With regard to unlisted securities median market prices are
used based on various important broker sources (OTC-Market).
Disclaimer This publication has been prepared and published by Silvia
Quandt Research GmbH, a subsidiary of Silvia Quandt & Cie. AG. This
publication is intended solely for distribution to professional and
business customers of Silvia Quandt & Cie. AG. It is not intended to be
distributed to private investors or private customers. Any information in
this report is based on data obtained from publicly available information
and sources considered to be reliable, but no representations or guarantees
are made by Silvia Quandt Research GmbH with regard to the accuracy or
completeness of the data or information contained in this report. The
opinions and estimates contained herein constitute our best judgement at
this date and time, and are subject to change without notice. Prior to this
publication, the analysis has not been communicated to the analysed
companies and changed subsequently. This report is for information purposes
only; it is not intended to be and should not be construed as a
recommendation, offer or solicitation to acquire, or dispose of, any of the
securities mentioned in this report. In compliance with statutory and
regulatory provisions, Silvia Quandt & Cie. AG and Silvia Quandt Research
GmbH have set up effective organisational and administrative arrangements
to prevent and avoid possible conflicts of interests in preparing and
transmitting analyses. These include, in particular, inhouse information
barriers (Chinese walls). These information barriers apply to any
information which is not publicly available and to which any of Silvia
Quandt & Cie. AG and Silvia Quandt Research GmbH or its affiliates may have
access from a business relationship with the issuer. For statutory or
contractual reasons, this information may not be used in an analysis of the
securities and is therefore not included in this report. Silvia Quandt &
Cie. AG and Silvia Quandt Research GmbH, its affiliates and/or clients may
conduct or may have conducted transactions for their own account or for the
account of other parties with respect to the securities mentioned in this
report or related investments before the recipient has received this
report. Silvia Quandt & Cie. AG and Silvia Quandt Research GmbH or its
affiliates, its executives, managers and employees may hold shares or
positions, possibly even short sale positions, in securities mentioned in
this report or in related investments. Silvia Quandt & Cie. AG in
particular may provide banking or other advisory services to interested
parties. Neither Silvia Quandt Research GmbH, Silvia Quandt & Cie. AG or
its affiliates nor any of its officers, shareholders or employees accept
any liability for any direct or consequential loss arising from any use of
this publication or its contents. Copyright and database rights protection
exists in this publication and it may not be reproduced, distributed or
published by any person for any purpose without the prior express consent
of Silvia Quandt Research GmbH. All rights reserved. Any investments
referred to herein may involve significant risk, are not necessarily
available in all jurisdictions, may be illiquid and may not be suitable for
all investors. The value of, or income from, any investments referred to
herein may fluctuate and/or be affected by changes in exchange rates. Past
performance is not indicative of future results. Investors should make
their own investment decisions without relying on this publication. Only
investors with sufficient knowledge and experience in financial matters to
evaluate the merits and risks should consider an investment in any issuer
or market discussed herein and other persons should not take any action on
the basis of this publication.
Specific notices of possible conflicts of interest with respect to issuers
or securities forming the subject of this report according to US or English
law: None
This publication is issued in the United Kingdom only to persons described
in Articles 19, 47 and 49 of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2001 and is not intended to be distributed,
directly or indirectly, to any other class of persons (including private
investors). Neither this publication nor any copy of it may be taken or
transmitted into the United States of America or distributed, directly or
indirectly, in the United States of America.
Frankfurt am Main, 26.03.2012
Silvia Quandt Research GmbH
Grüneburgweg 1860322 Frankfurt
Tel: + 49 69 95 92 90 93 -0
Fax: + 49 69 95 92 90 93 - 11
Ende der Corporate News
---------------------------------------------------------------------
26.03.2012 Veröffentlichung einer Corporate News/Finanznachricht,
übermittelt durch die DGAP - ein Unternehmen der EquityStory AG.
Für den Inhalt der Mitteilung ist der Emittent / Herausgeber
verantwortlich.
Die DGAP Distributionsservices umfassen gesetzliche Meldepflichten,
Corporate News/Finanznachrichten und Pressemitteilungen.
Medienarchiv unter http://www.dgap-medientreff.de und
http://www.dgap.de
---------------------------------------------------------------------
162187 26.03.2012
DGAP-News: Silvia Quandt & Cie. AG, Merchant & Investment Banking /
Schlagwort(e): Sonstiges
Silvia Quandt & Cie. AG, Merchant & Investment Banking: In-between the
lines - Bernhard Eschweiler
26.03.2012 / 10:33
---------------------------------------------------------------------
- Official and market forecasts for German growth are rising again
- Domestic demand, especially housing construction, seen as growth engine
- Upward revisions will support positive market momentum
In the second half of last year, we argued strongly against the widespread
pessimism in financial markets. In particular, we did not believe in a
double-dip recession in the US and a Chinese hard landing. Against this
background, we also saw little risk that Germany could get pulled into a
recession despite the drag from the Euro debt crisis. By and large our
view has prevailed. Nevertheless, our 1.5% growth estimate for Germany in
2012 seemed overly optimistic compared to official and market forecasts.
This is starting to change.
Over the last 10 days, three of the five leading German economic research
institutes (IfW, IWH and RWI) raised their growth forecasts for this year
as well as 2013. Market consensus forecasts have moved higher as well.
More revisions from other official and market sources are likely to follow
and will probably point in a similar direction. The only exception so far
is the forecast of the government's expert advisory board (the so-called 5
'Wiseman'). This, however, was not a full-scale review, but a tiny interim
adjustment, which incorporated the weaker data around the turn of the year.
To be sure, our growth outlook is still on the high side. For 2012, the
gap is between 0.2 and 0.9 of a percent. For 2013, however, most new
estimates are approaching our 2+% growth forecast. In terms of the
quarterly profile, this implies that most forecasters still expect some
weakness in the first half of this year. In contrast, we expect growth
already to resume in the first quarter. Our positive estimate for the
first quarter is mostly based on the rise in business confidence
indicators, which imply a return to trend growth. The risk to our view is
that the pick-up will start later than the indicators imply. Industrial
production rose in January, but was still below the fourth- quarter
average. Thus, industrial production will have to rise further in February
and March to validate our view.
Cyclical and monetary shifts
The positive change in German growth forecasts reflects two key
developments:
- First, signs that the global business cycle is regaining momentum. In
the US, the proof is already in the numbers. In most other economies,
rising leading indicators point to a turnaround.
- Second, massive monetary policy support. Most instrumental is the
liquidity support from the ECB, which has prevented a financial
meltdown in Europe and elsewhere. Furthermore, the policy shift in
Emerging Markets, notably China, from tightening to easing provides
real stimulus.
German housing recovery becomes reality
In the case of Germany, the improved cyclical and monetary conditions are
complemented by positive domestic demand fundamentals. This is nothing new
and actual figures have so far disappointed expectations, especially
consumer spending. Still, there is reason for optimism. One area where
positive fundamentals are starting to materialize is construction,
especially for housing. The German housing sector is highly fragmented (by
location, demographics and regulation), yet several developments stand out:
- While population growth has stagnated over the last ten years, the
number of households has increased by nearly 7%.
- Labor market and income dynamics have improved markedly.
- Mortgage rates are at historical lows, both in nominal and real terms,
and banks are happy to lend.
- Discouraged by the financial and Euro debt crisis and worried about
inflation, Germans are looking for 'real' investment opportunities at
home.
- Supply has not kept up with demand. The average housing completion
rate over the last ten years was less than 3 units per 1000 residents.
For the last five years it was barely two, while 3-to-4 units are
needed over time to maintain housing stocks and standards.
- The demand-supply imbalance is likely to increase if better economic
performance in Germany leads to more migration from the Euro-area
periphery.
To be sure, Germany is unlikely to experience a US-style housing boom, but
recovery is no longer a forecast. The Bundesbank reported in its February
monthly bulletin that housing prices rose 5.5% in 2011, after 2.5% in 2010,
which is a notable pick-up from the near stagnation in previous years.
According to the federal statistics office, housing construction permits
rose 22% in 2011. The Ifo institute expects that housing permits will rise
11% in 2012 and another 8% in 2013.
A supplementary development for the construction sector is the fallout from
Germany's new energy strategy. First, new energy efficiency rules for
housing
and tax incentives are leading to investments in insulation and better
heating systems. Second, the replacement of nuclear power through
renewable energy requires massive investments in the energy infrastructure,
which has a large construction component. Against this positive demand
backdrop, Germany's construction sector has some catch-up to do. Since the
mid 1990s, the number of construction companies fell by 45% and the number
of construction workers dropped by 53%. Not surprisingly, the February Ifo
survey reported the first positive balance of responses from construction
firms in over ten years.
Forecast changes to support market momentum
The change in official and consensus forecasts is important for markets,
especially equities. So far, the rally has been driven by better economic
news versus low expectations. The result has been short covering. Actual
trading volumes have been relatively low. Markets have also been torn
between stronger forward looking indicators (e.g. surveys) and softer
backward data (e.g. production figures). The positive forecast revisions
mean that not just the absence of bad news but genuine optimism will push
market sentiment higher. This development is not only happening at the
macro level but at stock levels as well. This is probably not the start of
a lasting bull market, given the broader deleveraging environment, but the
positive forecast revisions imply that the rally has some momentum left.
Disclaimer
This analysis was prepared by Bernhard Eschweiler, Senior Economic Advisor,
and was first published 26 March 2012, Silvia Quandt Research GmbH,
Grüneburgweg 18, 60322 Frankfurt is responsible for its preparation. German
Regulatory Authority: Bundesanstalt für Finanzdienstleistungsaufsicht
(BaFin), Graurheindorfer Str. 108, 53117 Bonn and Lurgiallee 12, 60439
Frankfurt.
Publication according to article 5 (4) no. 3 of the German Regulation
concerning the analysis of financial instruments (Finanzanalyseverordnung):
^
Number of recommendations Thereof recommendations for issuers to which
from Silvia Quandt Research investment banking services were provided
during
GmbH in 2012 the preceding twelve months
Buys: 93 35
Neutral: 56 6
Avoid: 10 0
Company disclosures
Article 34b of the German Securities Trading Act (Wertpapierhandelsgesetz)
in combination with the German regulation concerning the analysis of
financial instruments (Finanzanalyseverordnung) requires an enterprise
preparing a securities analysis to point out possible conflicts of interest
with respect to the company or companies that are the subject of the
analysis. A conflict of interest is presumed to exist, in particular, if an
enterprise preparing a security analysis:
(a) holds more than 5 % of the share capital of the company or companies
analysed;
(b) has lead managed or co-lead managed a public offering of the
securities of the company or companies in the previous 12 months;
(c) has provided investment banking services for the company or companies
analysed during the last 12 months for which a compensation has been or
will be paid;
(d) is serving as a liquidity provider for the company's securities by
issuing buy and sell orders;
(e) is party to an agreement with the company or companies that is the
subject of the analysis relating to the production of the recommendation;
(f) or the analyst covering the issue has other significant financial
interests with respect to the company or companies that are the subject of
this analysis, for example holding a seat on the company's boards.
In this respective analysis the following of the above-mentioned conflicts
of interests exist: none
Silvia Quandt Research GmbH, Silvia Quandt & Cie. AG, and its affiliated
companies regularly hold shares of the analysed company or companies in
their trading portfolios. The views expressed in this analysis reflect the
personal views of the analyst about the subject securities or issuers. No
part of the analyst's compensation was, is or will be directly or
indirectly tied to the specific recommendations or views expressed in this
analysis. It has not been determined in advance whether and at what
intervals this report will be updated.
Equity Recommendation Definitions Silvia Quandt Research GmbH analysts rate
the shares of the companies they cover on an absolute basis using a 6 -
12-month target price. 'Buys' assume an upside of more than 10% from the
current price during the following 6 - 12-months. These securities are
expected to out-perform their respective sector indices. Securities with an
expected negative absolute performance of more than 10% and an
under-performance to their respective sector index are rated 'avoids'.
Securities where the current share price is within a 10% range of the
sector performance are rated 'neutral'. Securities prices used in this
report are closing prices of the day before publication unless a different
date is stated. With regard to unlisted securities median market prices are
used based on various important broker sources (OTC-Market).
Disclaimer This publication has been prepared and published by Silvia
Quandt Research GmbH, a subsidiary of Silvia Quandt & Cie. AG. This
publication is intended solely for distribution to professional and
business customers of Silvia Quandt & Cie. AG. It is not intended to be
distributed to private investors or private customers. Any information in
this report is based on data obtained from publicly available information
and sources considered to be reliable, but no representations or guarantees
are made by Silvia Quandt Research GmbH with regard to the accuracy or
completeness of the data or information contained in this report. The
opinions and estimates contained herein constitute our best judgement at
this date and time, and are subject to change without notice. Prior to this
publication, the analysis has not been communicated to the analysed
companies and changed subsequently. This report is for information purposes
only; it is not intended to be and should not be construed as a
recommendation, offer or solicitation to acquire, or dispose of, any of the
securities mentioned in this report. In compliance with statutory and
regulatory provisions, Silvia Quandt & Cie. AG and Silvia Quandt Research
GmbH have set up effective organisational and administrative arrangements
to prevent and avoid possible conflicts of interests in preparing and
transmitting analyses. These include, in particular, inhouse information
barriers (Chinese walls). These information barriers apply to any
information which is not publicly available and to which any of Silvia
Quandt & Cie. AG and Silvia Quandt Research GmbH or its affiliates may have
access from a business relationship with the issuer. For statutory or
contractual reasons, this information may not be used in an analysis of the
securities and is therefore not included in this report. Silvia Quandt &
Cie. AG and Silvia Quandt Research GmbH, its affiliates and/or clients may
conduct or may have conducted transactions for their own account or for the
account of other parties with respect to the securities mentioned in this
report or related investments before the recipient has received this
report. Silvia Quandt & Cie. AG and Silvia Quandt Research GmbH or its
affiliates, its executives, managers and employees may hold shares or
positions, possibly even short sale positions, in securities mentioned in
this report or in related investments. Silvia Quandt & Cie. AG in
particular may provide banking or other advisory services to interested
parties. Neither Silvia Quandt Research GmbH, Silvia Quandt & Cie. AG or
its affiliates nor any of its officers, shareholders or employees accept
any liability for any direct or consequential loss arising from any use of
this publication or its contents. Copyright and database rights protection
exists in this publication and it may not be reproduced, distributed or
published by any person for any purpose without the prior express consent
of Silvia Quandt Research GmbH. All rights reserved. Any investments
referred to herein may involve significant risk, are not necessarily
available in all jurisdictions, may be illiquid and may not be suitable for
all investors. The value of, or income from, any investments referred to
herein may fluctuate and/or be affected by changes in exchange rates. Past
performance is not indicative of future results. Investors should make
their own investment decisions without relying on this publication. Only
investors with sufficient knowledge and experience in financial matters to
evaluate the merits and risks should consider an investment in any issuer
or market discussed herein and other persons should not take any action on
the basis of this publication.
Specific notices of possible conflicts of interest with respect to issuers
or securities forming the subject of this report according to US or English
law: None
This publication is issued in the United Kingdom only to persons described
in Articles 19, 47 and 49 of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2001 and is not intended to be distributed,
directly or indirectly, to any other class of persons (including private
investors). Neither this publication nor any copy of it may be taken or
transmitted into the United States of America or distributed, directly or
indirectly, in the United States of America.
Frankfurt am Main, 26.03.2012
Silvia Quandt Research GmbH
Grüneburgweg 1860322 Frankfurt
Tel: + 49 69 95 92 90 93 -0
Fax: + 49 69 95 92 90 93 - 11
Ende der Corporate News
---------------------------------------------------------------------
26.03.2012 Veröffentlichung einer Corporate News/Finanznachricht,
übermittelt durch die DGAP - ein Unternehmen der EquityStory AG.
Für den Inhalt der Mitteilung ist der Emittent / Herausgeber
verantwortlich.
Die DGAP Distributionsservices umfassen gesetzliche Meldepflichten,
Corporate News/Finanznachrichten und Pressemitteilungen.
Medienarchiv unter http://www.dgap-medientreff.de und
http://www.dgap.de
---------------------------------------------------------------------
162187 26.03.2012