Many local investors are actively betting on falling prices, which could do the market good in combination with international funds, according to Joachim Goldberg.
While large international capital continues to be bullish on equities, local investors are pulling back or betting on falling prices. 15 percent of professionals have gone short, 7 percent of private investors. Of these, half also sold shares, the rest had not been in the market before. This shows Joachim Goldberg that the DAX losses are homemade.
For the behavioural economist, the situation is favourable for further price gains. However, he expects the first profit-taking by the bears only at 15,450/15,500 points. On the upside, the cash position of international investors shows sufficient "powder" for price gains.
19 January 2022. FRANKFURT (Börse Frankfurt). The fact that the DAX has lost 1.4 percent since our last sentiment survey can hardly be attributed to the fact that the yield on ten-year Bunds rose above the 0 percent mark today for the first time since May 2019. Especially since the origin of this development can probably be found in the recent sharp rise in yields on comparable U.S. government bonds. And the fact that international fund managers see the greatest risk for the financial markets in too strong key interest rate increases by the U.S. Federal Reserve confirms once again the Bank of America (BofA) survey published on this yesterday. It also shows that the Corona pandemic is hardly perceived as a risk factor for the markets anymore. On the contrary. The hope of the players for an early end of the pandemic seems to outweigh even interest and inflation fears. In the survey conducted from January 7 to 13, equities were once again the asset class in which fund managers (55 percent of respondents) were most overweight.
... especially in this country
However, this positive attitude does not seem to be shared by the local investors with a medium-term trading horizon we surveyed. Our Börse Frankfurt Sentiment Index fell by 21 points compared to the previous week to a level of -14. A change in sentiment that is remarkable in that 6 percent of all respondents have moved directly from the bull to the bear side, even though the DAX has only strengthened by 110 points at its peak since our last survey and has since lost 2.9 percent of its value at times. An indication that one or the other bullish position may have been involuntarily abandoned. Indes: The greater part of the almost 50 percent gain in the bear camp is attributable to previously neutral investors.
But also among private investors, the positive sentiment from the beginning of the year has now completely evaporated: The Frankfurt Stock Exchange Sentiment Index fell by 11 points in this panel to a new level of -1. The increase in the number of pessimists is made up almost equally of former bulls and previously neutral players.
Predominantly home-made
Today's survey shows two things. On the one hand, the gap between institutional and private investors has grown again, although the latter have not reacted as violently as their counterparts. On the other hand, it is clear that the recent DAX development is homemade and probably not due to capital outflows by international investors. This is also supported by the fact that, at least until recently, international fund managers remained loyal to eurozone equities. According to the aforementioned BofA survey, 35 percent (December: 31 percent) of them stated that they were overweight in the euro zone.
On balance, therefore, this is not such bad news for the DAX, as at least domestic investors are likely to provide support for the stock market barometer through buybacks in the event of renewed price declines. However, the new pessimists of today would only become active against an increased risk premium, which is reflected in a possibly lowered first demand level to 15,450/15,500. On the other hand, the cash ratio of international investors is still relatively high at 5.0 percent, so that from this perspective alone, there would still be enough "powder" for further equity investments.
19 January 2022, © Goldberg & Goldberg for boerse-frankfurt.de
Bullish | Bearish | Neutral | |
Total | 32% | 46% | 22% |
compared to last survey | -6% | +15% | -9% |
DAX (change from previous survey): 15.750 (-230 pts.)
Börse Frankfurt Sentiment Index Institutional Investors: -14 points (previous survey: +7 points)
Bullish | Bearish | Neutral | |
Total | 39% | 40% | 21% |
compared to last survey | -4% | +7% | -3% |
DAX (change from previous survey): 15.750 (-230 pts.)
Börse Frankfurt Sentiment Index Private Investors: -1 points (previous survey: +10 points)
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