DAX Index Soars to Record High with Hedge Fund Bet and Monetary Stimulus

The DAX index is soaring towards a new record high in Europe, fueled by a $1 billion hedge fund bet against several of Germany’s major companies.

DAX Sees Strong Growth

The Frankfurt-based DAX DX:DAX has experienced a 1.4% surge, reaching 16,864. This surpasses the previous high achieved at the end of last year and brings its gains over the past three months to an impressive 13.3%. The positive momentum has been driven by news of a monetary stimulus introduced by China, one of Germany’s key trading partners. Additionally, encouraging financial results from prominent DAX members have contributed to this upward trend.

Germany’s Exposure to China

Investors believe that Germany, being the largest economy in Europe, is particularly sensitive to Chinese demand. Therefore, the decision made by the People’s Bank of China to ease monetary policy in order to bolster economic growth has been warmly received by traders. Consequently, vehicle manufacturers who have significant exposure to the Chinese market have witnessed an increase in their share prices. Companies like Volkswagen VOW, Porsche P911, Mercedes-Benz MBG, and Daimler Truck DTG have all seen their shares rise by a notable 1% to 3%.

SAP Delivers Impressive Results

Another factor driving the DAX’s upward trajectory is the exceptional performance of SAP SAP. As the DAX’s largest constituent with a weightage of just over 10%, SAP holds significant influence over the index. SAP’s shares have surged nearly 8% to reach a record high after reporting a staggering 94% increase in fourth-quarter earnings from continuing operations. In order to bolster profitability, the software group also announced plans to cut 8,000 jobs.

With all these positive developments, the DAX continues to captivate investors and propel Europe’s largest economy to new heights.

Siemens Energy Reports Positive Q1 Results

Siemens Energy (ENR) has reported a preliminary increase in profitability, as well as exceeding expectations for orders and revenue in its first quarter. As a result, their shares have seen a bounce of nearly 9%. This positive news has contributed to a fresh advance in German stocks.

Hedge Fund Qube Research & Technologies on Alert

Hedge fund Qube Research & Technologies (QRT) is closely watching the recent rise in German stocks. QRT, which was spun out of Credit Suisse in 2008, has built short positions in some of the most high-profile German companies. These positions amount to over $1 billion dollars, reflecting their anticipation of a difficult period for the European economy due to slowing growth and increasing political tensions.

Volkswagen: QRT’s Biggest Short Position

QRT’s largest short position, worth nearly $380 million, is in the common and preferred stock of Volkswagen. This means that the hedge fund will benefit if share prices for Volkswagen fall. Calculations by Bloomberg have revealed this significant short position.

Other Short Positions

Aside from Volkswagen, QRT also has significant short positions in other German companies. They have a short interest of 0.94% in Rheinmetall stock, amounting to approximately $148 million. The hedge fund has also bet against Siemens Energy and Deutsche Bank, with short positions totaling about $146 million and $132 million, respectively.

Smaller Short Positions

QRT also holds smaller short positions in MorphoSys stock (1.39%) and HelloFresh (0.68%).