Article / 18 December 2012 at 6:31 GMT

Outrageous Prediction: DAX plunges 33 percent to 5,000

Head of Equity Strategy / Saxo Bank

The leading German stock market index DAX was one of the world’s best performing stock markets in 2012 as Europe’s economic juggernaut continued to fare better than most Eurozone countries, despite the crisis on the continent and weaker activity in China. This will all change in 2013 as China’s economic slowdown continues, thereby putting a halt to Germany’s industrial expansion. This causes large price declines in industrial stocks due to stagnating revenue and declining profits at major industry players such as Siemens, BASF and Daimler. This market stress deflates consumer confidence and as a result domestic demand, highlighted by weak retail sales. With domestic demand failing to offset weakening exports, approval ratings for Chancellor Angela Merkel plunge ahead of the German election in the third quarter, and ultimately the deteriorated economic situation obstructs her re-election attempt. With a weak economy and uncertainty about a new government, the DAX index declines to 5,000, down 33 percent for the year.

njaisson njaisson
I have heard the same story from the buy side for the last three year. The Dax is going to plunge! This dire disinformation is designed to make the retail traders lose money by leveraging the public fear, which is the best ay to push the retail investors to unfortunate action. The institutional investors adopt the opposite strategy: they buy when everyone else is selling. This is a very common experience which has been confirmed so many times on many different markets like gold, silver or currencies like the euro, or the US$. The euro may be the best example of how the portfolio managers are selling fear to the gullible public convincing them to sell when they conceal the fact that the FX market is nothing but free, due to the intervention power of the central banks, like the ECB or the FED.
njaisson njaisson
I would rather say that the Dax is on its way to the 8,000 mark by Christmas eve and then will be rife for a Fib correction of 23% to 38% between the beginnig of Jan and the end of Feb 2013. i don't know many portfolio managers who have been able to predict by the 1st of Dec 2011, that 2012 will be the recovery year for the Euro and the Eurozone (I did it!!), though it had been announced by the Head of the ECB by the end of 2011. Now the portfolio managers are repeating the same mistake all over again on the basis of the overbought/oversold strategy, which is a poor way to analyze the market, though it can bought easily by the novice trader.
Peter Garnry Peter Garnry
@njaisson: I know it is called an Outrageous Prediction, but it is not a prediction (confused?) which is also stated in the foreword by our Chief Economist Steen Jakobsen. It is an attempt to come up with events that would truly be outrageous if they happended in 2013 because consensus is the other camp.


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail