Is Germany heading for stock market disaster? German carmakers at risk of export meltdown

Tuesday, July 18, 2017
By Paul Martin

GERMANY’S biggest carmakers are at risk of an export-related meltdown that could trigger a huge stock sell-off in the Eurozone’s largest economy, an expert has warned.

Tue, Jul 18, 2017

Volkswagen, BMW and Daimler revenues could suffer a revenue hit from lower overseas sales, after the euro strengthened against the dollar in recent months, investors have feared.

The eurozone currency is up around 10 per cent against its American counterpart since March.

And this is thought to be part of the reason why Germany’s top stock index the DAX has stumbled over the past couple of weeks and hit three-month lows.

The stock sell-off could deepen if companies dependent on exports start to report a hit to profits.

Kathleen Brooks, research director at City Index Direct, said: “With the majority of European companies set to announce results in the coming weeks, investors may already be pricing in the prospect of a strong euro hitting profits.

“We believe that German carmakers could be at risk from the rising euro and the export-heavy automobile sector makes up nearly 12 per cent of the entire Dax index.

“If the euro persists in strengthening then a deeper sell off in the overall Dax index could also be on the cards.”

It comes as Swedish telecoms company Ericsson witnessed a share price fall of 11 per cent on Tuesday after reporting weak earnings, and forecasting weaker revenue trends in the coming quarters.

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