Now is the time to find opportunities in the German market, before the expected bounce back, delegates were told at Real Asset Media’s Germany Investment Briefing, which was held online this week.
“Soon things will be normal again, so act now and grab the opportunities, because they will be gone in six months’ time,” said Christian Zilly, managing partner, Waterway Investments. “Don’t underestimate the speed of the return to normality. We bounced back from the GFC and this time it will be the same,” he added.
Nevertheless, the speed of the recovery will depend on how fast the covid vaccine roll-out will be and progress so far has been slower than expected.
“This will be an interesting year, as countries with better vaccination programmes will open up their markets earlier and will recover faster,” said Philipp Ellebracht, group head of sales, Corestate Capital Group.
“But the German market has the liquidity and size that others don’t have and, from an economic growth pojnt of view, 2021 should be a good year,” he added.
Germany’s strong fundamentals and safe haven status are still unrivalled, experts agreed.
Pent up demand bodes well for consumer recovery
“The economy will have a boost this year,” said Zilly. “The industrial sector is doing well and Asian countries have recovered strongly, which has been positive for German exporters. The recovery is underway and there’ll be a boom in consumer spending, consumers have accumulated €20 billion in savings and there’s a lot of pent-up demand.”
Two question marks hang over the recovery. One is the vaccine roll-out and the other is the political outlook. It is a crucial year for Germany, with a general election in September and local elections in the run-up.
“The future is less clear now compared to six months ago, because with Covid things move very fast and the number of people vaccinated has become a real issue,” Zilly said. “We, like everyone in business, hope for a strong coalition.”
A lurch to the extreme right or to the extreme left would unsettle the political stability that Germany has enjoyed and this, in turn, would have an impact on business confidence and the economic recovery.
But such an outcome is seen as unlikely. “I’m optimistic,” said Holger Schmalfuß, senior originator, international investors, Berlin Hyp. “I’m excited about the return to a new normal.”