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April 18, 2024
PI Global Investments
Hedge Funds

DAX index jumps to record high as hedge fund bets $1 bln against German stocks


The DAX index was on course for a fresh record high midday Wednesday in Europe as a hedge fund placed a $1 billion bet against some of Germany’s biggest companies.

The Frankfurt-based DAX
DX:DAX
rose 1.4% to 16,864, topping the previous high set at the end of last year and taking its gains over just the last three months to 13.3%, as traders welcomed news of a monetary stimulus in big trading partner China, and some of the benchmark’s biggest members delivered well-received results.

Investors consider Europe’s largest economy to be particularly sensitive to demand from China, so a decision revealed Wednesday by the People’s Bank of China to loosen monetary policy to boost economic growth was welcomed by traders.

Vehicle manufacturers with notable exposure to China’s consumers saw their shares move higher, with Volkswagen
VOW,
+1.63%
,
Porsche
P911,
+1.42%
,
Mercedes-Benz
MBG,
+0.98%

and Daimler Truck
DTG,
+2.53%

adding between 1% to 3%.

Additional momentum came from the results of SAP
SAP,
+7.15%
.
Shares in the software group, which is the DAX’s biggest constituent with a weighting of just over 10%, rose nearly 8% to a record high after revealing that fourth-quarter earnings from continuing operations jumped 94% and it would cut 8,000 jobs to boost profitability.

DAX member Siemens Energy
ENR,
+10.43%

also contributed, its shares bouncing nearly 9%, after reporting a preliminary increase in profitability, and orders and revenue in its first quarter which exceeded expectations.

The fresh advance in German stocks is likely to be watched warily by hedge fund Qube Research & Technologies.

According to regulatory filings in Germany, QRT, which was spun out of Credit Suisse in 2008, has built short positions in some of the most high profile German companies, totaling more than $1 billion dollars, in anticipation that the European economy faces a difficult period as growth slows and political tensions build.

QRT’s biggest short position, from which the hedge fund will benefit if share prices fall, is in the common and preferred stock of Volkswagen and totals nearly $380 million, according to calculations by Bloomberg, which first broke the news.

QRT has a 0.94% short interest in Rheinmetall stock
RHM,
+1.91%
,
according to a filing dated Tuesday, a wager of about $148 million. Bets against Siemens Energy and Deutsche Bank
DBK,
+1.40%

come to about $146 million and $132 million, respectively.

Smaller-valued positions include being short 1.39% of MorphoSys
MOR,
+5.96%

stock and 0.68% of HelloFresh
HFG,
+1.49%
.

It is not known if QRT’s short bets are a hedge against other long holdings, however. By time of publication QRT had not responded to MarketWatch’s request for comment.



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