German Stocks Increase to Three-Year High; Adidas, Deutsche Bank Advance
German stocks rose, sending the DAX Index to its highest level in three years, on speculation increasing corporate earnings will continue to support the rally in equities.
Adidas AG gained 3.6 percent after Chief Executive Officer Herbert Hainer was reported as forecasting a positive growth trend for 2011 and higher sales from China. GEA Group AG jumped 6.2 percent after the engineering company reported profit that beat analysts’ estimates. SolarWorld AG surged 6.7 percent after full-year earnings advanced.
The benchmark DAX added 0.9 percent to 7,283.62 at the 5:30 p.m. close in Frankfurt, the highest level since January 2008. The gauge has gained 5.3 percent this year amid optimism that the global economic recovery is gathering strength. The broader HDAX Index rose 1 percent today.
“It doesn’t look like the world economy is going to lose any momentum in 2011, if anything it is gaining momentum,” said Mike Lenhoff, chief strategist in London at Brewin Dolphin Securities Ltd., whose parent company oversees $33 billion. “This will be supportive for equities.”
Factory Orders
Stocks maintained gains even after a report showed German factory orders declined more than expected in December. Orders dropped 3.4 from the previous month, adjusted for seasonal swings and inflation. A Bloomberg survey of economists had forecast a decline of 1.5 percent. Orders increased 5.2 percent in November from the prior month.
“Many are arguing for a correction given that the market appears overbought and the sentiment is seen as overly bullish,” JPMorgan Chase & Co. London-based equity strategist Mislav Matejka wrote in a report today. “We believe risk-reward for stocks remains compelling, and continue to advise buying into any weakness.”
Adidas gained 3.6 percent to 47.69 euros, the biggest rally since September. Hainer said the company will grow significantly this year after a strong 2010, Deutsches Anleger Fernsehen reported, citing an interview. Adidas will grow 15 percent to 20 percent annually in China over the next five years and exceed 1 billion euros in revenue ($1.36 billion) this year, Hainer said, according to the television interview.
Raised Dividend
GEA jumped 6.2 percent to 22.78 euros. The engineering company supplying the food and energy industries reported earnings for last year that beat analysts’ estimates and raised its dividend.
The Bochum, Germany-based company proposed to lift its dividend to 40 cents a share from 30 cents, it said in a statement today. Earnings before interest and taxes before restructuring expenses rose to 140 million euros, ahead of a 118 million-euro Commerzbank estimate. SolarWorld rose 6.7 percent to 8.34 euros after the German solar-cell manufacturer said full-year earnings before interest and tax increased to 193 million euros from 153 million euros.
Separately, the stock was raised to “neutral” from “underperform” at Credit Suisse Group AG, which wrote in a report that there is “too much upside risk to remain bearish” on the stock. SolarWorld has rebounded 14 percent this year after a 50 percent slump in 2010. WestLB AG upgraded the stock to “add” from “neutral.”
Deutsche Bank AG, Germany’s largest bank, gained 1.3 percent to 46.82 euros, its fifth straight advance. The stock was raised to “buy” from “add” by analysts at Commerzbank AG, who cited higher earnings estimates for the lender.
Air Berlin, Drillisch
Air Berlin Plc advanced 3.8 percent to 3.58 euros. The airline’s passenger traffic increased 5.7 percent to 2.15 million in January, the airline said today. The January load factor rose to 72 percent from 69 percent, the Berlin-based company said.
Drillisch AG climbed 5.7 percent to 6.91 euros, its sixth consecutive increase. The company said it plans to increase its dividend for 2010 by 70 percent to 50 euro cents after reporting a 13 percent gain in full-year adjusted earnings before interest, taxes, depreciation and amortization.
SGL Carbon SE declined 1.6 percent to 27.09 euros. The stock was cut to “neutral” from “buy” at UBS AG, which also downgraded its price estimate to 28 euros from 30 euros.
-- With assistance from Julie Cruz in Frankfurt. Editors: Will Hadfield, Peter Branton
To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.
To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.
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