German Stocks Tumble Most Since 2011 on Ukraine CrisisInyoung Hwang
German stocks dropped the most in more than two years as the U.S. threatened sanctions against Russia for its military intervention in Ukraine, raising concern a disruption in trade and business will hurt earnings.
Stada Arzneimittel AG, which gets almost a fifth of its sales from Russia, tumbled 5 percent after Commerzbank AG advised investors to avoid the stock if the conflict in eastern Europe escalates. ThyssenKrupp AG lost 4 percent after Boersen-Zeitung said Germany’s largest steelmaker has attracted bidders for its Gleistechnik and Electrical Steel units.
The benchmark DAX Index slid 3.4 percent to 9,358.89 at the close in Frankfurt, its biggest plunge since Nov. 1, 2011. All 30 members of the gauge retreated. The DAX rallied 4.1 percent in February after Federal Reserve Chair Janet Yellen pledged to follow her predecessor Ben S. Bernanke’s police on stimulus. The broader HDAX Index also fell 3.3 percent today.
“The Crimean reaction to the ousting of the Ukrainian government, the Russian response and the counter-response from the U.S. and Europe, are the focus for markets,” Kit Juckes, a global strategist at Societe Generale SA, wrote in an e-mail. “The weekend’s events will be followed by a lot of uncertainty and further risk aversion as a diplomatic solution is sought.”
The number of shares changing hands in DAX-listed companies was 29 percent higher than the 30-day average, according to data compiled by Bloomberg for this time of day.
U.S. Secretary of State John Kerry yesterday raised the prospect of sanctions against Russia and said the country may lose its membership of the Group of Eight nations. If Russia didn’t step back, there could be asset freezes, visa bans and disruption of trade, he said. Kerry is traveling to Kiev today to offer support to the new regime that took over after President Viktor Yanukovych fled.
Russian President Vladimir Putin got parliamentary approval for troop deployment in Ukraine after pro-Russian fighters took control of government buildings in the eastern European nation’s Crimea region.
The predominantly Russian-speaking Crimea became the latest flashpoint in a violent conflict since November as lawmakers in Kiev proposed to overturn legislation making Russian an official state language. That contributed to protests in Crimea and a Russian plan for a military offensive. The peninsular region will hold a referendum in May on its territorial status.
Stada Arzneimittel AG slid 5 percent to 35.40 euros, its biggest drop since Nov. 13. Investors should avoid Stada if the Ukraine conflict becomes more intense, Commerzbank analysts said in a note. Russia accounted for 19 percent of Stada’s sales in 2012, while Ukraine contributed 1.7 percent, according to data compiled by Bloomberg. The generic-drug maker highlighted Russian sales growth when it reported 2012 earnings last year.
ThyssenKrupp declined 4 percent to 18.97 euros, for the biggest drop in three months. The company is facilitating due diligence of Gleistechnik and Electrical Steel, Boersen-Zeitung said, citing Chief Financial Officer Guido Kerkhoff in an interview.
Commerzbank slumped 6.1 percent to 12.34 euros, tracking losses in a gauge of European lenders, which slipped 2.8 percent.
A measure of carmakers and auto-parts manufacturers posted the second-biggest drop in the Stoxx Europe 600 Index, the region-wide benchmark. Daimler AG slid 3.2 percent to 65.37 euros. Continental AG retreated 3.7 percent to 169.75 euros.