Others are apparently involved in the new highs, not medium-term oriented domestic investors. Some of them are under pressure to close the year without too many losses.
The medium-term investors we surveyed reacted quite differently to the rising stock market at record levels. Of the professionals, 7% have moved out of short positions and 9% have moved into equities. The sentiment index now stands at -6 points. Still quite skeptical, according to Joachim Goldberg. 6 percent of private investors have turned bearish, while 3 percent have given up their long positions. The sentiment index for this group stands at -7%.
Joachim Goldberg points out that international investors are responsible for the price gains. While local players seem to have found the reactions to last week's central bank meetings too positive. The professionals in particular would certainly have struggled to get out of their short positions without making a loss. On balance, however, the behavioral economist no longer expects any major upswing from closed-out exposures.
20 December 2023. FRANKFURT (Goldberg & Goldberg). At the time of our sentiment survey, the DAX was down for the first time in eight weeks, albeit by a manageable 0.5%. Much more significant, however, is the fact that the stock market barometer has been able to post a new record high since last Wednesday, when it briefly exceeded the 17,000 mark. The fact that the DAX has now followed up the strong month of November with a gain of around 4.9% in December is probably also due to international demand.
The latest fund manager survey by Bank of America not only revealed that a net 15% of asset managers - a significant increase on the previous month - say they are overweight in equities globally. In fact, the eurozone, which has recently been neglected by fund managers, also benefited from inflows of funds - only 9% net (previous month: 23%) describe their exposure there as underweight. In other words: While domestic institutional investors have been gradually shedding their DAX holdings over the past few weeks, this supply has been absorbed by international players.
Strong international demand
Meanwhile, the strong pessimism of institutional investors with a medium-term trading horizon last week has receded again. Our Börse Frankfurt Sentiment Index has recovered by 16 points to a new level of -6. The group of optimists has increased by 9 percentage points - slightly more than three quarters of this increase is made up of former pessimists who have turned 180 degrees bullish on balance over the past few days.
We have observed the opposite trend among private investors. The Börse Frankfurt Sentiment Index for this panel has fallen by 9 points to a new level of -7. This means that sentiment has deteriorated for the fourth time in a row, but predominantly in a rising market. In other words, the majority of private investors have pocketed their profits over the past few weeks and have recently moved directly to the short side in some cases.
Characterized by slight caution
The sentiment gap of recent weeks between private and institutional investors has thus almost completely disappeared. Both panels are obviously ending the last trading days of this year with slightly mixed feelings. It is quite possible that in some places the price reactions to last week's central bank meetings - particularly those in the USA - were perceived as too positive. However, private investors have found it somewhat easier than their institutional counterparts in view of the more bullish pre-positioning. The latter have presumably struggled, at least in part, to capitalize at least a little on their previously clearly pessimistic stance or to emerge with their skins halfway intact.
At the same time, many of the previously bearish positions of domestic institutional investors should now have been eliminated, so that the DAX should not be driven by the closing out of larger exposures for the rest of the year.
This is the last sentiment survey for this year. We will be back on January 3, 2024 and wish the participants and readers of our sentiment surveys a Merry Christmas and a successful New Year!
20 December 2023, © Goldberg & Goldberg für boerse-frankfurt.de
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Bullish | Bearish | Neutral | |
Total | 34% | 40% | 26% |
To previous week | +9% | -7% | -2% |
DAX (change to previous week): 16.750 (-80 to previous week)
Börse Frankfurt Sentiment Index of institutional investors: -6 points (+16 to previous week)
Bullish | Bearish | Neutral | |
Total | 37% | 44% | 19% |
To previous week | -3% | +6% | -3% |
DAX (change to previous week): 16.750 (-80 to previous week)
Börse Frankfurt Sentiment Index private investors: -7 points (-9 to previous week)
The Börse Frankfurt Sentiment Index ranges between -100 (total pessimism) and +100 (total optimism), the transition from positive to negative values marks the neutral line.
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