Droht eine Vermögensblase in Deutschland?

Painful years ahead
The Eurozone problems are far from over. Many of the peripheral economies face years of weak, if any, growth as austerity measures and deleveraging take their toll. We do not expect further policy action from EU officials in the short-term. Much of that work has already been undertaken in terms of establishing the EFSF, the European Stability Mechanism, and reforming the Stability and Growth Pact. Southern European states have shown no intention to surrender fiscal sovereignty for now. It is interesting to note that in the USA, inter-State fiscal transfers can be as much as 20% of a State GDP compared to a maximum of 3% in Europe. We believe that Germany would, perhaps surprisingly, have accepted the necessity for more transfers to the South. Given the example of East Germany, the restructuring of peripheral countries is likely to take 10 to 20 years to complete.
 
While some companies will struggle to keep their heads above water in this environment, the strong will get stronger. Some businesses will even grow faster as a consequence of the side effects of deleveraging. Some companies that focus on low cost could fare well. Examples include the Spanish hard discounter Dia, the French telecoms discounter Iliad and the budget airline Ryanair. They could benefit from exhausted competitors and value-hungry customers.
 
In the financial sector, there is unlikely to be any improvement in terms of profitability of banks in the periphery countries. The ECB’s LTRO has worked but perhaps too well. There is a sense that the problems have gone away but they haven’t been solved. While the sell case on the Spanish banks is well known, we see more risk in owning Intesa after a year-to-date rally. Meanwhile, the following banks are all trading at a discount to tangible book value while earning double-digit return on equity, which we prefer: DNB NOR, BNP Paribas and KBC.
 
A German asset bubble?
Meanwhile, Germany faces the opposite problem of an overheating economy, which could result in some unconventional measures to cool down the economy including a possible re-localisation of monetary policy and German-specific capital requirements for banks operating in the country. The German economy may already be in the danger zone given that unemployment is below its structural level (6%) and growth next year (forecast at just below 2%) will overshoot trend growth (1.25%). Some cities like Berlin and Munich also saw double-digit increases in real estate prices last year.
 
With wage and real estate inflationary pressures, we like German companies Bilfinger and Metro and in the small cap area, United Internet and GSW.