Article Abstract:
German corporate restructuring could push up share values by 20% in the two to five years from 1996, according to Goldman Sachs. Companies can increase returns by relocating production abroad and direct investment abroad has risen fourfold over a decade. There are also signs of a weakening of institutional obstacles to restructuring such as restrictions affecting share buybacks. Manufacturing industry is most likely to benefit from share value rises but other sectors could also benefit.
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Article Abstract:
There is concern that German earnings growth could be affected by the ipact of the Asian financial crisis on export markets. Economic growth is likely to be affected, but wage inflation could remain low due to high unemployment, and increases in output could boost productivity, which in turn could boost earnings. Interest rates have more impact on stock prices than earnings, and if rates are raised, stocks could be affected by both higher rates and lower earnings expectations.
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Article Abstract:
German interest rates may be raised prior to year-end 1997 which could hit stock prices by increasing long-bond yields and pushing up the value of the German mark which could hit exporters. This rise could already be taken into account in German stock prices. There is also no certainty that bond yields will rise, and economic recovery may offset a rise in the value of the German mark. There is a disagreement as to whether German stocks are overvalued.
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