“Over the last 15 years Germany has come to be seen by many in Europe as a paragon of political stability”, says Ronald G. Asch in The Spectator. Now Angela Merkel, the country’s “perennial chancellor”, is preparing to retire. An election on 26 September will decide who replaces her at the helm of Europe’s biggest economy.
The next coalition
The election campaign has proved volatile. The centre-left Social Democrats (SPD) have soared in the polls in recent weeks at the expense of Merkel’s conservative CDU. Gaffes by the “buffoonish” Armin Laschet, the CDU’s candidate to succeed Merkel, have alienated voters. They have taken a shine to SPD candidate Olaf Scholz, who currently serves as the finance minister in a coalition government with Merkel’s party. Scholz seems “serious-minded” and “pleasantly boring – something very much appreciated by the majority of German voters”.
Scholz’s SPD is proposing “a suite of progressive but modest economic policies”, says Tom Rees in The Daily Telegraph. The party wants to boost public investment, using tax increases to pay for it. If the SPD manages to “maintain its present momentum” then it will probably favour a coalition with the liberal Free Democrats and the Greens, says Cedric Gemehl of Gavekal Research. The parties’ respective red/yellow/green colours mean that combination is dubbed a “traffic light coalition”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Such a coalition would not be “revolutionary”: Germany’s constitutional “debt brake”, which limits government deficits, would probably be left untouched. But an SPD-led government would still be more “fiscally proactive” and more favourable to European integration than the present one.
The blue-chip index expands
It is not just Germany’s political system that is heading for a shake-up. The benchmark Dax stock index will soon be grappling with a new government and will also expand to 40 companies from the current 30 on 20 September. The changes are part of a broader shakeup in response to last year’s Wirecard fiasco, says Brigitte Scholtes in Deutsche Welle. The former Dax constituent went bust last year following a major accounting scandal.
Operator Deutsche Börse has tightened rules about corporate governance and will require firms to be profitable before they can be included in the index in the future. The new members will include Porsche and sportswear brand Puma. Aircraft manufacturer Airbus and online clothes seller Zalando have also made the cut.
The Dax was founded in 1988, says Joe Miller in the Financial Times. Since then it has delivered a total return comparable to that of the FTSE 100 over the same period, averaging 8.6% annually. The expansion reflects a concern that the index had become overly weighted towards old economy industries such as carmakers, banks and industrial groups. By offering a broader selection of companies, a bigger Dax should give investors a more accurate cross-section of the German economy.
-
Chase increases easy access savings rate to 5% for new customers – is it the best rate on the market?Chase has been popular with savers with its competitive savings deals – but does its new improved bonus interest fixed rate make it a best buy and who is eligible?
-
8 of the best houses for sale for around £2 millionThe best houses for sale for around £2 million – from a houseboat moored at London’s Prospect Quay, Wandsworth, to a 15th-century chateau in Pas-de-Calais, France
-
Who’s driving Tesla?As Elon Musk steps back from government with his eyes on the stars, investors ask if he’s still behind the wheel at his electric-car maker.
-
Europe's investment potential: Stocks are cheap and ready to riseDaniel Avigad, manager of the TM Lansdowne European Special Situations Fund, discusses Europe's investment potential with Andrew van Sickle
-
Investment opportunities in the world of Coca-ColaThere is far more to Coca-Cola than just one giant firm. The companies that bottle and distribute the ubiquitous soft drink are promising investments in their own right.
-
Streaming services are the new magic money tree for investors – but for how long?Opinion Streaming services are in full bloom and laden with profits, but beware – winter is coming, warns Matthew Lynn
-
'Pension funds shouldn't be pushed into private equity sector'Opinion The private-equity party is over, so don't push pension funds into the sector, says Merryn Somerset Webb.
-
Greg Abel: Warren Buffett’s heir takes the throneGreg Abel is considered a safe pair of hands as he takes centre stage at Berkshire Hathaway. But he arrives after one of the hardest acts to follow in investment history, Warren Buffett. Can he thrive?
-
Who will be the next Warren Buffett?Opinion There won’t be another Warren Buffett. Times have changed, and the opportunities are no longer there, says Matthew Lynn.
-
Will Comstock crash – or soar?Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.
