• 01.1
  Our Year 2008
• 01.2
  Management Board
• 01.3
  Report of the Supervisory Board
• 01.4
  Capital Market and Stock

01.4

Capital Market and Stock

STOCK MARKET

In 2008, the stock markets showed a very weak development, triggered by the real estate crisis in the U.S. in mid-2007 and heightened by the related bank crisis and the negative effects on the real economy. After declining very sharply at the beginning of the year, the stock market briefly recovered starting in March. From May, further strong declines followed with only short phases of stabilization. All in all, the leading stock indexes, including the German DAX, the U.S. Dow Jones, and Japan’s Nikkei, underwent parallel developments in the course of the year, suffering loses of more than 30 %. 2008 was marked not only by price drops but also by massive price fluctuations

Of the world’s leading stock indexes, the U.S. Dow Jones index fared best. The Dow Jones performed somewhat better than some European stock indexes partially due to the advantageous exchange rate between the U.S. dollar and other currencies, which benefited exporting companies. Another likely reason was that the Federal Reserve Bank reduced key interest rates faster and more strongly than other reserve banks, which fueled expectations that the U.S. stock market would improve. The Dow Jones index closed 2008 at 8,776 points, 34 % lower than at the beginning of the year, when it reached its high for the year. After five consecutive years of increases, the German DAX index dropped by 40 %. However, it was one of the indexes that showed the best development in 2008. The DAX’s 8,067 points at the beginning of 2008 were its high for the year, analogous to the development of the Dow Jones index. This was followed by a sharp downswing. Within just a few trading days, the DAX fell to 6,500 points. The subsequent lateral movement in a wide spectrum from 6,200 to 7,000 points was followed from September 2008 by an additional significant and rapid decline, this time by more than 30 % in just a few weeks. The DAX recovered somewhat towards the end of 2008, closing the year at 4,810 points.

The trend was also very negative on the other European stock markets, with some dropping even more strongly than the Dow Jones and the DAX indexes. The initial hope that the Asian markets could detach themselves from the development in Europe and the U.S. came to an end quickly as economic data got weaker and weaker starting in mid-2008. When the smaller economies, which are more dependent on outer influences, showed particularly strong declines, their stock markets also came under pressure. The Singapore Straits Times and Hong Kong Hang Seng indexes dropped by more than 50 % in 2008. The Japanese Nikkei index closed the year at 8,860 points, down 42 %.

Different industries developed very differently in 2008. The prices of shares of bank and insurance companies dropped substantially due to the financial and bank crisis. Shares of mining and oil companies also plummeted on account of the economic downturn and the resulting decreases in the price of their products. The same could be observed with shares generally considered cyclical, such as shares of companies in the strong exportoriented sectors. On the other hand, the shares of companies in the healthcare sector were among the top performers. An increasing aversion to risks on the part of investors could be observed again in 2008. Many market participants were worried that smaller companies would be affected more by the recession. As a reaction to this, they sold their shares, particularly small and mid cap shares.