Germany’s blue-chip index is a eyeing a fresh record as investors warm to its tech-lite mix of relatively lowly-valued but high quality industrials, carmakers, insurance and healthcare companies.
One way for U.S. investors to track German stocks is via the Global X DAX Germany ETF DAX . A broader European vehicle is the Vanguard FTSE Europe ETF VGK . First to consider is the Ukraine war and the concomitant surge in energy costs. The DAX was among the worst global performers in the weeks following Russia’s attack on Ukraine in February 2022 as markets worried about the danger of the war spilling over and the damage to sentiment it caused.
DAX constituents get 23.9% of their total revenue from the U.S. according to FactSet. But the next biggest foreign market is mainland China on 8.4%. And importantly those Chinese revenues are growing faster, up nearly 12% over the past year compared to U.S. growth of just shy of 10%. Such tailwinds are attracting more foreign inflows to not just Germany but the continent more broadly. By the end of the first quarter investors had pulled $34 billion from U.S. equities funds so far this year, according to recent data from EPFR.