The tone of economic releases from the EU over the last month, particularly Germany, has been increasingly less optimistic. The export-driven economy looks to be suffering from a knock-on effect of the Chinese and Asian market troubles in the middle of the year. With a sizable proportion of the country’s exports going to countries outside the EU, Germany has felt the effects of the global economy cooling more than most of its neighbours.
The dividend yield on the DAX is currently running at 2.99% – well below the FTSE 100’s 3.77% level, but at a better rate than any European bank’s interest rate. The index has increased by 18.7% year-to-date and with this record level, together with incomes beginning to stagnate, it is maybe no surprise that investors are wondering where fair value is or if it has already been reached.
This week will see a number of EU policies being reviewed by European Central Bank president Mario Draghi, as he and fellow board members find themselves being forced into action rather than the rhetoric that has been so prevalent over the last twelve months.