Earnings doubts

Article Abstract:

There is concern that German earnings growth could be affected by the ipact of the Asian financial crisis on export markets. Economic growth is likely to be affected, but wage inflation could remain low due to high unemployment, and increases in output could boost productivity, which in turn could boost earnings. Interest rates have more impact on stock prices than earnings, and if rates are raised, stocks could be affected by both higher rates and lower earnings expectations.

Economic aspects

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In the price?

Article Abstract:

German interest rates may be raised prior to year-end 1997 which could hit stock prices by increasing long-bond yields and pushing up the value of the German mark which could hit exporters. This rise could already be taken into account in German stock prices. There is also no certainty that bond yields will rise, and economic recovery may offset a rise in the value of the German mark. There is a disagreement as to whether German stocks are overvalued.

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