Economic concerns and geopolitical crises determining the performance of the German equity market

The German equity markets entered 2014 with a volatile sideways development. The currency turbulence, particularly in the emerging markets, in the wake of the U.S. Fed’s announcement of a change in its monetary policy, the sustained economic slowdown in China and geopolitical uncertainties due to the conflict between Russia and Ukraine temporarily exerted considerable pressure on the markets in the first quarter. In the second quarter, equity markets were supported by the ECB’s continued expansionary monetary policy, improved economic indicators in the United States and brisk M&A activity. As a result, the DAX exceeded the 10,000 mark for the first time. However, the sustained crisis in Ukraine, unrest in Iraq and Syria as well as muted economic data from the Eurozone led to significant price corrections in the third quarter. In the course of the quarter, German equities were buoyed by robust economic conditions in the United States and a further easing of the ECB’s monetary policy. Towards the end of the third quarter, prices were dragged down by weak economic data from China and a worsening of the Ukraine conflict. In the fourth quarter, fears of a recession in the Eurozone, currency turbulence in Russia and declining oil prices caused a sharp correction. The surprising cut in interest rates in China and speculation of asset-purchasing by the ECB unleashed a considerable recovery in equity prices at the end of December, propelling the DAX and the MDAX to new historical highs. All in all, the DAX closed 2014 3% higher and the MDAX 2% higher compared with the end of 2013.

HUGO BOSS share influenced by volatile general market conditions in 2014

At the beginning of the year, the HUGO BOSS share came under pressure as the earnings published in the premium and luxury goods industry were perceived as disappointing and because of the macroeconomic uncertainties in many emerging markets that are of above-average importance for the sector. However, following the publication of the Group’s results for 2013 and the positive outlook for the year 2014, the HUGO BOSS share recovered significantly from mid-March onward, receiving further support after the figures for the first quarter of 2014 were published at the beginning of May. After the distribution of the dividend for 2013 in mid-May triggered only a temporary price correction, the share climbed to a new record high of EUR 113.55 in mid-July. Disappointing earnings in the sector in tandem with a significant deterioration in sentiment in the equity markets then triggered a price correction, which the share was able to partially reverse by the end of August however. Thereafter, the placement of just under eight million shares by majority shareholder Permira at the beginning of September and the more cautious outlook for the premium and luxury goods industry triggered further price corrections. In the fourth quarter, the HUGO BOSS share initially benefited from the general recovery in the equity markets but then corrected in response to the adjustment of the Group’s financial guidance for 2014 published in November as well as the placement of a further five million shares by majority shareholder Permira in December. At the end of the reporting period, the HUGO BOSS share was trading at EUR 101.70, 2% down on its 2013 closing price of EUR 103.50.

HUGO BOSS share outperforms industry index

The MSCI World Textiles, Apparel & Luxury Goods Index, which tracks the share price performance of companies operating in these sectors, retreated by 4% in 2014. This means the HUGO BOSS share outperformed the sector average but slightly underperformed the German benchmark indices MDAX and DAX.