Market Overview: Frankfurt Stock Exchange (DAX) 2011, wk.

1
Week 17, which was shorter due to Easter holidays, has brought constant positive trendsto the
Frankfurt Stock Exchange.The DAX indexincreasedevery day;the biggest growth was observed on
Thursday, while Friday’s closing value of 7,514 is the highest that has been reached this week.
Overall, the DAX index value increased by 2.97% over the week 17.Such trends can be observed in
other stock exchanges as well; however, DAX remains one of the most successfully performing
indexes (see graph below).

Figure 1 Changes in the DAX index from April 21 till April 29. Compared to changes in the New York Stock Exchange
(NYSE), International and Commodities ETF (MSCI), and the Tokyo Stock Exchange (Topix Core 30)

On Thursday it was published that German unemployment has fallen below 3 million (7.3 percent)
for the first time in almost 19 years in April in adjusted terms, increasing the likelihood that
household spending will boost economic growth. This fact supports the good state of German
economy, similarly like the other statistical data that has been published during previous weeks.
The winners of week 17 are Volkswagen AG (VOW) with a gain of 11.95% and Porsche
Automobil Holding SE (PAH3)with a gain of 10.15%. This week was not so fortunate forSAP
AG (SAP.DE) and Commerzbank AG (CBK.DE),which are the biggest losers with a decline of
4.37% and 2.49% respectively.
Volkswagen AG (VOW) was the week’s top performer. Volkswagen is a Germany-based
automobile manufacturer which consists of Automotive and Financial Services divisions. The
shares rose 1.6% on Tuesday and surged €5.80, or 4.8%, on Wednesday after the company reported
record quarterly operating profit (Ebit more than tripled to 2.91 billion eurosfrom 848 million euros
a year earlier). The increase in profit comes from the rising demand in China where the firm’s VW
and Audi brands attracted more customers. Volkswagen is merging with Porsche, this week’s
second best performer, and holds a 49.9% stake in the company’s carmaking division (Porsche
owns a 51% stake in Volkswagen). Porsche reported earnings before interest and tax of 496 million
euros, more than double compared to last year’s. The shares continued to climb and rose 3.56% and
1.53% on Thursday and Friday respectively as Commerzbank raised target on VW’s preference
shares affirming the ‘buy’ recommendation (meaning that the shares are expected to outperform the
DAX index by at least 15% over the next six months). The total gain over the course of four days
was an impressive 11.95%.

Market Overview is not an advice. Neither authors nor iFund or other representatives are liable for possible use of information contained i
1 it. Relatively reliable public information (Exchanges websites, Bloomberg, Reuters, etc) was used to produce this Market Overview.
 Market Overview: Frankfurt Stock Exchange (DAX) 2011, wk. 1
Some basic technical analysis of the stock suggests that the downward trend which lasted since
mid-December 2010 may be reversing as strong performance this week broke the resistance line
and the MACD indicator suggests a bullish trend (See figure 3). The readers are welcome to
analyze the stock further and make their own conclusions.

Figure 2 Performance of Volkswagen AG (VOW) (week17)

Market Overview is not an advice. Neither authors nor iFund or other representatives are liable for possible use of information contained i
2 it. Relatively reliable public information (Exchanges websites, Bloomberg, Reuters, etc) was used to produce this Market Overview.
 Market Overview: Frankfurt Stock Exchange (DAX) 2011, wk. 1

Figure 3Basic technical analysis of Volkswagen AG (VOW)

The shares of Porsche Automobil Holding SE (PAH3)rose nearly as significantly as VW’s and
the stock became the second top performer on the Frankfurt Stock Exchange. The shares advanced
2% on Tuesday on speculation that Porsche SE may increase sales by 10% this year. As the
company’s carmaking division announced increased income thanks to a 62% jump in sales of
Porsche’s revamped best-selling model, the Cayenne, the shares rallied 5.9% to €47.87 per share.
The price continued to rise and was up 1.6% on Thursday and 0.6% on Friday, closing at €48.82
and ending the week with an increase of 10.15%.
A quick look at the technical analysis of the stock shows that although the shares are rising, they
may soon hit the resistance line and start declining, continuing the downward trend which has been
in effect since late January (See figure 5). The MACD indicator, however, does not send the ‘sell’
signals yet.

Market Overview is not an advice. Neither authors nor iFund or other representatives are liable for possible use of information contained i
3 it. Relatively reliable public information (Exchanges websites, Bloomberg, Reuters, etc) was used to produce this Market Overview.
 Market Overview: Frankfurt Stock Exchange (DAX) 2011, wk. 1

Figure 4 Performance of Porsche Automobil Holding (PAH3) (week 17)

Figure 5 Basic technical analysis of Porsche Automobil Holding SE (PAH3)

Market Overview is not an advice. Neither authors nor iFund or other representatives are liable for possible use of information contained i
4 it. Relatively reliable public information (Exchanges websites, Bloomberg, Reuters, etc) was used to produce this Market Overview.
 Market Overview: Frankfurt Stock Exchange (DAX) 2011, wk. 1

Figure 6 Performance of SAP AG (SAP) shares (red) and DAX Index (blue) (week 17)

At the very top of loser pedestal for this week stands SAP AG (SAP). In overall, it underperformed
only on the last two days of the week. It started the week with an opening priceof €45.49. The fall
in share price on Thursday resulted in -4.37% changes in week 17. The closing price of the SAP
was € 43.50 per share. SAP AG is Europe’s largest software company. It was set up by five former
IBM engineers in 1972 and now employs about 54 thousand employees around the globe. This
German company focuses on enterprises’ software development and support. SAP AG generated
€1.816 billion in profits in 2010. On Wednesday the share price has reached a 52-week high i.e.
+27% compared to a year earlier. Price dropped because company didn’t reach the market’s
expected profits in the first quarter of 2011. Analysts have forecasted profit amounting to half a
billion euros which in reality ended up being only 403 million euros.

Figure 7 Performance of COMMERZBANK AG (CBK) shares (red) and DAX Index (blue) (week 17)

After one week Commerzbank AG (CBK) has “managed” to get among the worst performers of
the week. The opening price per share on Tuesday was €4.41. It continues the trend of slight falling
which started on the 20th of April. However,the closing price on Friday was €4.3 per share resulting
in a2.49% decrease in week 17. Commerzbank AG is one of the largest banks in Germany serving
its private and corporate clients with all general financial services. The substantial decrease of share
price after revealed plans about the aim to repay state financial aid hasn’t fully diminished. Another
push down was the Italy-based European UniCredit bank reducing its price target on shares by €1.
It might make investors reconsider prices of peer banks in the stock market.

Market Overview is not an advice. Neither authors nor iFund or other representatives are liable for possible use of information contained i
5 it. Relatively reliable public information (Exchanges websites, Bloomberg, Reuters, etc) was used to produce this Market Overview.
 Market Overview: Frankfurt Stock Exchange (DAX) 2011, wk. 1

Figure 3Technical analysis of DAX (week 17)

Tech analysis shows continuing growth of DAX this week, the bulls are returning to the market.
The forecast is that the market will continue to grow in the future.
This week was quite optimistic. A sequence of favorable corporate reports ensured a positive pre-
holiday mood. The Germany continues to grow, as the Ministry of finance reported. Also it was
mentioned that the first quarter was experiencing a minor slowdown in growth due to weather
circumstances, but in the last month we could observe industrial growth and awakening of the real
estate market, as the frozen for the winter projects were being restored. Investors, basing on the pre-
holiday mood, did not fix their profits in the last day and went on holidays with generally opened
positions. On Monday the first event to catch their attention will be the meeting of the Fed on the
topic of interest rate.
In conclusion, the buying trend will be maintained after the holidays. The corporate report season
continues, what will keep investors in positive mood. Also the participants will be watching every
move of Bernanke after the Fed meeting, as the rumors about closing the loyalty program earlier
keep pressing stock markets not only in the US, but also in EU. Our final recommendation will be
to continue buying.

Review by LieneApsalone, KārlisMalcenieks, DmitrijsSureņans, JustinasŠukys

Market Overview is not an advice. Neither authors nor iFund or other representatives are liable for possible use of information contained i
6 it. Relatively reliable public information (Exchanges websites, Bloomberg, Reuters, etc) was used to produce this Market Overview.