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A booming stock market. Confident executives. Optimistic consumers. Who would have thought that the scene for all this jollity can be Germany?
Germans are at their most positive since last August, in keeping with a consumer survey released on Tuesday. In some boardrooms, things seem equally rosy. Deutsche Bank reported its best quarterly profit in 14 years. The lender is one in every of several corporations which have maintained full-year projections, as foreign rivals step back from theirs.
Lufthansa, for instance, stood by its outlook for the 12 months on Tuesday — an actual rarity within the economically sensitive airline world. Adidas boss Bjørn Gulden went further after solid first-quarter earnings, saying that “in a standard world” — meaning but for US tariffs — the sportswear giant would have raised its forecasts.
Germany has one thing most countries don’t: a plan to extend government largesse. In March the country loosened its constitutional spending limits, unleashing about €1tn in potential defence and infrastructure funding that might help end years of underperformance.
The Dax has rallied greater than 12 per cent this 12 months versus barely greater than 3 per cent for France’s Cac 40 and a 6 per cent fall for the S&P 500. At 16 times the following 12 months’ earnings, the German benchmark is at levels barely reached — and never sustained for long — for the reason that 2008 financial crisis, excepting throughout the wild days of the pandemic.
What could sustain it this time? Germany’s supertanker of an economy needs to indicate clear signs of escaping its doldrums to start with. Key sectors comparable to manufacturing are showing their best activity levels in two-plus years, but are still contracting, just at a slower pace. The IMF is predicting zero growth this 12 months and 0.9 per cent in 2026 for Germany. That’s an improvement on earlier forecasts, but hardly vibrant.
The country’s leading corporations have also been the beneficiaries of worldwide trends. Deutsche Bank’s first-quarter profitability was driven by its trading unit — a worldwide phenomenon also powering rivals’ investment banking businesses courtesy of volatile markets. Lufthansa’s solid begin to the 12 months too, is analogous to the performances reported by its more cautious rivals, even when its positive tone sounds somewhat unlike theirs.
Still, things haven’t looked this good for Germany Inc for a while. The economy and its biggest corporations, helped by geopolitics, are pulling in the identical direction. And with the Dax trading at about three-quarters the price-to-earnings multiple of the S&P 500, investors in other countries could be positively giddy. Germany’s long-awaited moment of corporate Frühlingsgefühle may finally be nearing.
jennifer.hughes@ft.com
