Analysis HQ Trust: The Dax performed best among these parties

There are parties that voters consider to have greater economic competence. In surveys, the CDU/CSU and FDP usually come out ahead of the others. Pascal Kielkopf has calculated whether these were also the parties under which the DAX performed better in the past.

In the first step, the capital market analyst at the multi-family office HQ Trust examined the average annual return of the DAX depending on who formed the German government. He compared this with the return over the entire period. The second step was about the relative return: under which party or government coalition did the DAX perform better or worse than the broad global stock index MSCI ACWI?

Specific economic situation not taken into account

Kielkopf's calculation covers the period since 1960 and thus four different parties and five different coalitions. The starting point is the time when the government takes office. However, it is important to note that global developments were not taken into account in this analysis, nor was the specific economic situation that preceded a government or influenced the economy during the government's term.

His findings: "At first glance, the markets actually performed better during the phases of the more market-oriented parties CDU/CSU and FDP. This is also reflected in the coalitions: in the past, the DAX performed best when the CDU/CSU and FDP formed the government." In these cases, the DAX achieved an average increase of 10.6 percent per year - the index increased significantly less over the entire analysis period, with an annual increase of 6.4 percent.

Here is the graphical representation of the results:

However, there were also two other coalition governments under which the DAX performed above average: under the grand coalition and the traffic light coalition . "If you look at individual parties, only the CDU/CSU managed to outperform the index. On average, the DAX performed worst when the SPD was part of the government," Kielkopf concluded.

However, the picture looks very different when you compare the returns of the DAX with those of the global MSCI ACWI Index: "On average, the DAX has only been able to outperform the rest of the world in the past when there was a grand coalition in Germany between the CDU/CSU and the SPD." In relative terms, the German leading index performed worst when there was a government made up of the SPD and the FDP. "Of the individual parties, the CDU/CSU is at the top here too, while the Greens performed worst for investors in relative terms."

Investors should not invest in stocks just because of one party

What can investors learn from the analysis? The capital market analyst warns against hasty conclusions:

• "Even though the differences in the past may seem quite clear at first glance, investors should not invest in stocks solely because of a party's participation in government."
• "At least in the medium to long term, the companies in the DAX are more dependent on global economic development than on German politics. For a boom on the world stock exchanges, it is hardly relevant which party provides the German chancellor."
• “In this case too, the wisdom that political markets usually have short legs may prove true.”