Row over advice to sell German shares after poll
Monday 24 October 1994
Deutsche immediately disowned the opinions expressed by the team. 'This is a significant and regrettable slip of the hand,' a Deutsche Bank spokesman said. 'The views on the future of the stock markets after the election and the political interpretation represent the opinions of neither Deutsche Bank nor of its subsidiary Deutsche Bank Research.'
Citing political instability, a general leftwards drift and the prospects of a weakening German economy the investment service, based in Dusseldorf, told big institutional clients to opt for caution and take their profits now.
The institutional investment report identified a leftwards trend in German politics, stating that the narrow 10-seat majority for the centre-right coalition under Chancellor Helmut Kohl made the political future inherently unstable. It cast doubt on whether the re-elected government would survive its four-year term.
The analysis also said it expected the German economy to be weaker in 1995.
This slowdown in growth, coupled with the controversial nature of the main issues to be addressed, such as social spending cuts, would place the fragile government under enormous strain, it said.
A further destabilising factor is Chancellor Kohl's lame- duck status, in that he will not stand in 1988, it said. The process of government will become much more difficult, and will be more left-influenced, given the imperative of reaching compromises on main legislative issues with an upper house dominated by the opposition Social Democrats, the report argued.
This is a good opportunity to reduce positions in German equities, the report concluded.
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