German Dax rally outpaces FTSE in 2012

Michael Bow
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AN blue chip companies roared ahead of their UK counterparts in 2012 after the Dax market index posted an increase almost five times the rise of the FTSE 100.

The German list of premier companies reported its biggest jump in almost a decade in 2012, up 29 per cent, despite continued bartering over the Greek economy and fears over Chinese and US growth.

But the UK’s FTSE 100 failed to match Germany’s runaway success, rising nearly six per cent following a mid-year blip in June when markets plunged following poor economic data from China and the US.

UK financial stocks have led the charge over the past 12 months, with state-backed Lloyds Banking Group and Royal Bank of Scotland rising 86 per cent and 61 per cent respectively.

Money managers have also had a good year, with new kid on the block Aberdeen Asset Management – which joined the index in March – jumping 73 per cent and Standard Life rising 61 per cent.

Both the FTSE and the Dax had previously surged to their highest peak for the year in mid-March, after a Greek deal on debt restructuring effectively secured a second bail out for the country. The FTSE 100 leapt to a high of 5,965 after the deal.

But hopes the Greek deal would propel a rally were short lived as the FTSE 100 plummeted to its year-long low just three months later, hitting 5,260 after the release of poor Chinese manufacturing data and sluggish US economic growth spooked the market.

The dip proved a turning point for both indices as moves by the European Central Bank to assuage investors in July then helped foster an unbeaten run of consecutive gains for the next seven months.

This helped the 30-company Dax index pull away from the FTSE 100 in the final quarter of 2012 to post its 29 per cent annual gain, making it the best performing index in the developed world and its best since 2003.

In contrast to the FTSE’s financial services-led surge, the German increase came from its export-led motor sector, with BMW up 42 per cent, Volkswagen up 57 per cent and Continental surging 84 per cent.

Elsewhere in Europe, France’s Cac index increased 15.2 per cent over the year. The US Dow Jones index increased 7.3 per cent while the Japanese Nikkei nearly matched Germany, rising 22.9 per cent.

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