German DAX Fails to Keep Pace in 2021 as Supply Crunch Hurts

(Bloomberg) --

The German stock rally that outstripped European peers last year is running out of steam as the global supply crunch hits exporters.

While the benchmark DAX Index outperformed the Stoxx Europe 600 Index in 2020, it’s clocking an advance of 16% this year, versus the European gauge’s 23%. Strategists expect gains to continue in 2022, albeit at a slower pace.

“It was a tough year for German stocks as companies’ high dependence on export, especially with links to China, caused higher fluctuations in their operating performance,” said Comdirect Bank strategist Andreas Lipkow. 

Surging raw-material costs and a supply crunch exacerbated by the pandemic have muted gains for the German index. The issues hampered a turnaround at Siemens Energy AG, which has slumped more than 24% for the worst performance on the DAX this year.

Another big loser was food-delivery firm Delivery Hero SE, which was hurt by the reversal in the lockdown trade and the proposal of new European regulations.

Growth stocks again dominated performance this year, especially from the technology sector, leaving the industrials-heavy benchmark behind, despite its biggest ever revamp in September that aimed to bring in more high-octane constituents.  

Still, the DAX’s 2021 gain is its fourth-best in the past decade. And strategists on average predict it will rise 11% in 2022, according to Bloomberg’s latest survey in early December.

“German stocks are certainly not cheap, but they are also not valued expensively and are still interesting in the context of significantly negative real interest rates,” said Tim Albrecht, head of German equities at DWS. “The right mix of growth stocks and cyclicals will again be an important recipe for success in 2022.”

©2021 Bloomberg L.P.