Germany's stock market is massively outperforming its European peers this year and moving in lockstep with U.S. equities. The main market, the DAX 30, is up about 19% so far this year, compared with the 5% hike of the European benchmark, the Stoxx 600. The gains in Germany are closer to performances seen stateside, where the S&P is up about 23% year-to-date.
Several reasons underpin these gains, including low expectations at the start of the year, the exposure to the United States economy and the upcoming snap election, analysts told CNBC. Sabrina Reeh, senior portfolio manager at DWS, told CNBC on Wednesday that valuations were relatively low at the start of the year and the sentiment was 'muted' across Germany equities, but that earnings developments ultimately came in 'better than expected.' One stock in particular propelled the German market: SAP, whose shares rose nearly 59% this year. Maximilian Uleer, head of European equity and cross asset strategy at Deutsche Bank, told CNBC that the company has contributed 8% to the year-to-date performance of the German market. In late October SAP shares hit an all-time high after the company raised its full-year targets and posted strong numbers for its cloud business. At the time, CEO Christian Klein said SAP was 'confidently' raising the outlook and added, 'we are making strong progress on Business AI.' The stock has kept gaining ground since the results. The success of German equities this year is also related to their exposure to the United States. 'DAX companies generate a higher share of their revenue in the U.S. than in Germany. Despite concerns about potential tariffs, a significant portion of that revenue is produced local for local and likely not subject to tariffs,' Deutsche Bank's Uleer said. Snap Election: A positive surprise Though the collapse of the German government in November largely emerged as a surprise, analysts recognize the development could become a positive for equitie