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Education Series: Single-Stock ETPs

DAX Rallies Despite Recession Jitters

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Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at

Flash euro zone inflation for March surprised with a larger-than-expected 1.6% drop during the month falling to 6.9%, down from 8.5% the prior month. This is the fifth consecutive monthly decline, however; the reading remains well above the European Central Bank’s target of 2%.

Core inflation, which excludes the volatile food and energy items, ticked up and hit a new record high of 5.7% for the bloc in March, putting enormous pressure on European Central Bank officials to continue on with further interest rate hikes.

Last month the ECB raised its main interest rate to 3% but did not offer guidance for its next meeting on the 4th of May, citing that the recent financial turmoil requires caution. Since then, however; several policymakers have signalled that more tightening might be necessary. While the decision of the ECB would be data-depended, markets have fully priced in a 25-basis point rate hike in May and another 25-basis point increase in June.

German equities posted healthy gains over the past six months, and investors have remained pretty buoyant despite the latest banking turmoil and the surprise production cut on Sunday by OPEC+ which triggered a sharp spike in oil prices at the beginning of the week.

Higher oil prices could filter through the global economy and have a significant inflationary impact. This is certainly a worry for central banks which have been trying to fight sky high inflation over the past year.

Earlier this week data showed that manufacturing activity in the euro zone remained in contraction territory, raising fears of an economic slowdown in the bloc. However, German exports posted their biggest monthly rise since June in February, boosting hopes the country may avoid recession in the first quarter of 2023.

The S&P Global Germany Services PMI was revised slightly lower to 53.7 in March of 2023 from a preliminary estimate of 53.9 but continued to point to the strongest growth in the services sector since May last year.

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Data released on Thursday showed that Industrial production in Germany surged 2.0% month-on-month in February, beating market forecasts of 0.1%. The DAX 40 traded higher on the news but risk sentiment remains fragile as the economy is slowing down.

The banking crisis has not dented demand for stocks and the Frankfurt benchmark index managed to reclaim its pre-banking turmoil highs. Hopes that the ECB may be approaching the end of its aggressive interest rate hiking cycle is supporting the equity market.

The DAX 40 index is holding up its last week’s gains, despite concerns about the spike in oil prices and the slowing manufacturing activity data. However, given the proximity to the multiple resistance around 15,700 combined with worries that the economy is cooling, further gains from here may be limited.

While at this point there is no reversal signal evident on the daily chart, we note the formation of a bearish divergence between the price and the Relative Index Indicator, which suggests that the rally from the September 2022 low might be approaching a turning point.

Active traders looking for magnified exposure to the German share market may consider our 3x Long Germany 40 and -3x Short Germany 40 ETPs.

ETPs have revolutionized the way investors gain exposure to a variety of asset classes, making investing more accessible, affordable, and transparent. These investment vehicles offer several benefits that make them an attractive choice for investors.

Investing in ETPs has never been more accessible than it is today. Our ETFs are designed to provide investors with the opportunity to diversify their portfolios and gain exposure to a wide range of assets, all while minimizing risk.

In summary, our ETPs provide a unique investment opportunity for investors looking for diversification, leverage, and liquidity. Don’t miss out on the chance to grow your wealth and achieve your financial goals.

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Sandeep Rao

Research

Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.

Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.

Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.

Violeta Todorova

Senior Research

Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.

Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.

Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.

Julian Manoilov

Senior Analyst

Julian joined Leverage Shares in 2018 as part of the company’s premier expansion in Eastern Europe. He is responsible for web content and raising brand awareness.

Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.

For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.

Oktay Kavrak

Director

Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.

He joined LS from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.

Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.

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