Foreign investors seem to appreciate ‘made in Germany.’
In the year 2000 foreign investors owned 30% of the Dax, which is the German counterpart to the Dow Jones (DJI: ^DJI). Like the Dow (NYSEArca: DIA), the Dax is made up of 30 (German) blue chip stocks.
Today foreign investors own 55% of the Dax.
For example, 3 of 4 Adidas shareholders are not from Germany. The same is true for re-insurer Munich Re. 54% of foreign investors own shares of the Deutsche Bank (translation: German Bank).
Foreign shareholders own the majority stake of 20 out of the 30 Dax components – there is no Dax ETF, but the iShares MSCI Germany ETF (NYSEArca: EWG) provides exposure to the German stock market.
One of the reasons investors around the globe favor German stocks is rising stock prices (although this is deceptive, see below).
The Dax gained 17% in the past year, which translates into $192 billion of new wealth. Ironically, that’s less than the S&P 500 (SNP: ^GSPC). The S&P 500 ETF (NYSEArca: SPY) trades 21% higher compared to a year ago.
Still, most of the money flowing into the Dax comes from the United States. US investors own 20% of Dax shares.
Blackrock alone owns 6% of Germany’s Dax. Chinese investors own only 3% of the Dax. No doubt, the Dax gains are good news for US investors.
Unfortunately, the Dax is perhaps the most deceptive index in the world, and the ‘real Dax’ is actually only worth half as much as the Dax on steroids. How can that be? The full story can be found here: The Most Deceptive Index in the World Hits 'All-time High'
Simon Maierhofer is the publisher of the Profit Radar Report.
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