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Education Series: Single-Stock ETPs

DAX 40 into Overbought Levels After a Strong Run

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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

According to data released by the German statistics office Destatis on Friday, the country’s gross domestic product (GDP) stagnated in the fourth quarter of 2022, growing by 1.9% over the year. However, this growth rate was slower than the 2.6% expansion seen in 2021, as the economy faced several challenges in 2022, including a severe energy crisis resulting from the war in Ukraine, high inflation, increasing borrowing costs, supply constraints, and a shortage of skilled workers.

The figures indicate that Germany may postpone a recession for now; however, it is still unlikely to avoid it. The annual GDP for 2022 exceeded forecasts of 1.8% growth and is 0.7% higher than in 2019, prior to the outbreak of the COVID-19 pandemic.

Despite the challenges, private consumption was the primary driver of growth, increasing by 4.6%, while fixed investment and public spending saw smaller increases of 0.2% and 1.1%, respectively. Additionally, net external demand negatively impacted the GDP, as imports rose more than exports. In terms of industries, the service sector led the expansion, while the manufacturing sector stagnated, and the construction sector contracted for a second consecutive year.

Europe’s biggest economy releases a preliminary full-year GDP figure before full December economic data is available, and an official fourth-quarter number isn’t due for a few weeks.

Inflation eased for a second month in a row in December due to falling energy prices and a one-off government off payment of household energy bills, with EU-harmonized consumer prices rising 9.6% year-on-year. There is good probability that inflation had peaked as global energy prices have been falling over the past nine months.

But substantial government interventions and a mild European winter have cushioned the blow and allayed fears of a major downturn. Thanks to the improved supply of energy, the outlook in December is much better than it was in October.

Wholesale price inflation in Germany rose to 12.8% year-on-year in December 2022, the softest rise since August 2021, following a 14.9% gain in November. Wholesale price growth peaked in April, with a 23.8% year-on-year increase.

The main focus this week is likely to be on the German CPI data for December and ZEW survey of economic sentiment for January, both released on Tuesday. Annual CPI data is expected to remain unchanged from the prior month reading of 8.6%, while the ZEW economic sentiment is expected to show an improvement to -15.5 from -23.3 in December.

Source: Tradingview

The German benchmark index has been rallying for two straight weeks gaining more than 8% since the onset of the year. The index has started the week on a positive note, trading above 15,140 for the first time since mid-February, helped by hopes that the worst of the global price squeeze is over and optimism about China’s re-opening.

Investors should be vigilant as the leading RSI has reached overbought levels after the rapid rally over the past two weeks and a technical counter-reaction would not be surprising. From current levels a decline to 14,700 in the short-term appears to be on the cards.

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

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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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

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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

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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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