DAX40 Down 12% From All-Time High – April Stock Watch

The German DAX index has declined from around 25,400 points to 22,400 points, with the DE40 futures contract closely mirroring the performance of the spot index almost one-to-one. In April, investor attention is likely to shift toward two key German names – financial heavyweight Deutsche Bank, which has recently revealed significant exposure to the technology sector and private credit lending, raising investor concerns, and BASF, the industrial and chemical giant that has been performing surprisingly well despite elevated energy prices.

Source: xStation5

Deutsche Bank (DBK.DE)

• Deutsche Bank has seen a sharp pullback from its January highs, falling from around €34 to €25. This move significantly exceeds the broader market correction and marks one of the steepest declines in recent years — close to a 30% drop.
• In April, focus will turn to the bank’s first-quarter results, scheduled for release on April 29. These figures will serve as a key test of whether Deutsche Bank can maintain the strong business momentum seen at the end of last year.
• Fundamentals remain solid for now — recent reports showed €9.7 billion in pre-tax profit, while net income doubled to €7.1 billion. Shareholder returns also remain supportive, with management announcing a €2.9 billion capital distribution plan, including €1.9 billion in dividends and €1 billion in share buybacks.
• The key question for the coming weeks is whether favorable conditions for trading and dealmaking activity will be enough to offset weaker sentiment toward the banking sector.
• The sell-off accelerated after the bank disclosed that its private credit portfolio had grown to €25.9 billion, heightening investor concerns about risks in a rapidly expanding but increasingly fragile segment.
• While Deutsche Bank emphasizes conservative underwriting standards and states it does not face significant direct risks, it acknowledges potential indirect credit risks stemming from interconnected exposures within the broader private credit ecosystem.
• At the same time, the bank’s exposure to the technology sector — including the recently underperforming software segment — has risen to €15.8 billion from €11.7 billion a year earlier, increasing sensitivity to cyclical shifts and AI-related pressures.
• Despite these warning signs, including liquidity stress in funds, loan markdowns, and tightening conditions signaled by JPMorgan — Deutsche Bank intends to continue expanding in private credit through new products, broader distribution, and integration with its private banking operations.

Source: xStation5

BASF (BAS.DE)

In contrast, BASF has maintained relatively strong momentum and is trading near local highs, standing out against the more volatile backdrop of the broader DAX index.

• Investors have responded positively to management’s decision to shift a significant portion of production from Germany to China, effectively reducing cost pressures in an environment of persistently high European energy prices.
• The upcoming results on April 30 will be important not only for assessing current operational performance but also for providing further insight into the company’s newly launched large-scale facility in China.
• Recent operating data showed volume growth across all segments, suggesting improving demand, although part of this effect has been offset by lower selling prices and unfavorable currency movements.
• On the bottom line, BASF is also showing improvement, with net profit increasing by €321 million to €1.6 billion. Ongoing restructuring efforts and geographic shifts are beginning to deliver tangible results.

Source: xStation5

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