2024-08-27 12:31:12
State elections in East Germany, US elections, mini-crash on the stock market: investors find themselves in turbulent times. An expert explains what could happen next with Dax and Co.
Things could be calmer on the stock markets these weeks. The mini-crash almost three weeks ago, in which the Japanese Nikkei index lost around 12 percent of its value in one day and the DAX lost more than three percent, shows how nervous investors are about the economy and monetary policy. And politically, we are also living in uncertain times:
An election victory for the AfD in Thuringia next weekend is not unlikely. In the USA, Donald Trump is fighting to return to the White House. The economy is stagnating and inflation is still there. How much will this mix of circumstances affect the stock markets?
t-online spoke to Thomas Lehr, capital market strategist at Cologne-based asset manager Flossbach von Storch, about what an AfD election victory in East Germany would mean for the DAX, how German companies could assert themselves against a restrictive trade policy by Donald Trump, and what a good investment can look like in uncertain times.
t-online: There are state elections in the East next weekend. Mr Lehr, how much will the DAX drop if the AfD wins the majority in Thuringia?
Thomas Lehr: Even if, as a politically interested citizen, I would like to see a different outcome, in my role as a capital market strategist I am relaxed: the AfD is no threat to the DAX.
From a global perspective, state elections play no role. Investors from the USA and Japan are so far away and have no connection to local state politics. It would certainly be a difference if the AfD won the federal election with an absolute majority. Then I would certainly revise the statement again.
Thomas Lehr has been a capital market strategist at Flossbach von Storch AG since the beginning of 2017. Before that, he worked for the Credit Suisse Group for 15 years, initially as an investment consultant and investment strategist in Germany and moved to Zurich during the financial crisis in 2008. Thomas Lehr completed his banking training in the German cooperative sector in the early 1990s. He then worked there as a financial advisor for many years.
Let’s look across the Atlantic. The election campaign is slowly entering its hot phase there. Donald Trump wants to return to the White House. What would be the worst case scenario in your opinion?
In theory, a deadlock would be the worst thing. But we cannot look at the US elections in isolation.
We had the aforementioned stalemate in the 2020 elections. And we saw frightening scenes, the storming of the Capitol. But the stock markets barely reacted to it. Political events rarely play a role. Even if I’m a spoilsport with this statement: for long-term investors, the US elections are not an issue. Other factors, such as inflation trends, are more important.
So you are not afraid of a US President Trump?
Not from an investor’s perspective. A very left-wing candidate like Bernie Sanders would be more dangerous for the stock market. When Trump was elected in 2016, there was nothing to be seen except for a bit of nervousness the morning after. Most people had expected much stronger fluctuations at the time, including me. Because Trump is so volatile. But that wasn’t the case.
It went up for 15 months straight. Until January 2018, there was not a single major setback, not even two or three percent.
Trump stands for a protectionist trade policy and high punitive tariffs. Does this have consequences for us in Germany?
Not just Trump. Joe Biden has continued Trump’s protectionist policies, albeit in a more moderate tone. In this respect, globally operating companies have adapted to this – and can react to it. Protectionism is not a problem specific to Trump.
Globalization has been in decline for years. A very strong global network is always a danger, for example in the case of supply bottlenecks, as we saw during the Corona crisis. Many companies are now producing locally again or have reduced their dependence on individual foreign locations. Most companies will be able to deal with a US President Trump.
However, Trump has already indicated that he wants to bring the US Federal Reserve more under his control and weaken the US dollar. This will also have consequences for global companies.
That would be the case, yes. But Trump knows that there are clear interactions here that would ultimately harm him. In this respect, I don’t think it’s realistic to implement the plan. Basically, currency movements are only bad when they come quickly and violently. If they happen slowly, the players learn to deal with them.