Will the Fall Election in Germany Be a Market-Mover?

Elections can turn the tide of single-country equities, and Germany’s could do just that, which makes the Global X DAX Germany ETF (DAX) one to watch.

According to a recent Reuters article, German elections are typically standard fare. However, this fall’s election will add some intrigue.

“It’s rare for German elections to be exciting, market-moving events but the one on Sept. 26 may prove the exception if its outcome completes the transformation of a nation long wedded to austerity into a big spender,” the article said. “The election will end Angela Merkel’s 16-year stint at the helm of Europe’s biggest economy, and the Greens have a chance to become the leading party in national government for the first time in their 40-year history.”

DAX seeks to provide investment results that closely correspond generally to the price and yield performance of the DAX® Index. The fund invests at least 80% of its total assets in the securities of the underlying index and in American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) based on the securities in the underlying index.

The index tracks the segment of the largest and most actively traded companies – known as blue chips – on the German equities market. Overall, DAX gives investors:

  • Efficient Access: DAX offers access to 30 of the largest and most liquid publicly traded companies in Germany, spanning a wide range of economic sectors.
  • Targeted Exposure: The fund provides targeted exposure to Germany, the largest economy in Europe by GDP.
  • Low-Cost Access: With a net expense ratio of just 0.21%.

DAX Chart

Germany’s Green Machine

A victory for Germany’s Green Party could bring about a number of structural changes.

These changes could “range from more environment-focused spending to greater euro zone cohesion. German bond yields have risen since the Greens nominated their first candidate for chancellor because of increased election uncertainty and a perception that increased fiscal spending could be on the way.”

“A Greens-led government would be a historic change for Germany, a country so far characterised by a culture of high political stability, moderation and centrism,” said Barbara Boettcher, head of European policy research at Deutsche Bank.

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