Europe: a rich history, a poor future? If many investors are to be believed, listed companies in Europe are not heading for prosperous times. This is especially true for Germany, as shown in a new infographic from Block-Builders.net.
In 2007, 46 of the 100 most valuable companies in the world were based in Europe. Today there are just 16, and none of them are from Germany, compared with 7 of the top 100 companies in 2007.
We might be seeing the first signs of a sell-off. Heavyweight investor Ray Dalio is currently taking short positions against European equities. German companies account for 38% of his positions.
Even private investors in Germany are increasingly looking at companies on the other side of the Atlantic. Amazon appeared most frequently on the watch lists of German share portfolios in July, followed by Apple and Tesla. Three German companies (Biontech, Allianz, Bayer) are also in the top 10, although they are not in the top positions. This is not surprising, as this is known as the home bias: the tendency of investors to give a disproportionate weighting to their home market.
From a German perspective, a look at the past price development is not very encouraging. For example, the DAX lost 18.8% in the 12-month review, more than the Dow Jones (-10.8%), the NIKKEI 225 (-8.9%) and many others. A look at the past 3 years likewise underlines the German benchmark index’s poorer performance.
As the infographic shows, 34% of European fund managers see potential for the sell-off of European equities to continue. However, only slightly fewer – 32% – expect things to pick up again.
Various factors are clouding the mood in Europe and above all in Germany. To name just 3 partially interwoven factors: the effects of the Ukraine war, the possibility of a new bloc formation with potential de-globalisation, and the fact that aside from SAP, only a few players have succeeded in gaining a prominent position in the promising tech segment.