Shares and Bonds

Volkswagen AG’s ordinary and preferred shares underperformed the market as a whole in 2016 in a volatile market environment.


Prices on the international equity markets experienced volatility in the reporting period. The DAX recorded a slight increase overall. In particular, recurring concerns about the economic performance of important industrialized nations, whether the United Kingdom would remain in the EU, the development of the oil price and the central banks’ monetary policy caused considerable volatility in the markets.

The beginning of the first quarter saw capital market participants become more unsettled due to the low oil price and falling prices on the Chinese stock market in response to a slowdown in Chinese economic growth. In mid-January, prices were temporarily propped up by hopes that the European Central Bank (ECB) would further loosen its monetary policy, but subsequently continued their downward trend in the wake of negative economic data from China. In mid-February, the DAX began to recover on the strength of an expected stabilization in the oil price and positive economic data from the USA. Concerns about whether the United Kingdom would remain in the EU caused prices to drop temporarily. Prices recovered over the further course of the first quarter as the ECB expanded its bond-buying program and cut its key interest rate.

Fears of an appreciation of the euro and deteriorating corporate data from Germany caused prices to decline at the beginning of the second quarter. The German benchmark index staged a temporary recovery in mid-April on the back of the rising oil price, which is usually regarded as a positive indicator for global economic growth, and favorable economic data from China. May saw prices move sideways before rising late in the month, buoyed by a further oil price increase.

Despite uncertainty over the United Kingdom’s continued membership of the EU, the DAX was propped up for a time in June by hopes that the US Federal Reserve would continue its loose monetary policy. The referendum at the end of June, which resulted in the British public voting to leave the EU, led to sharp falls in stock prices.

Uncertainties in the Italian banking system prompted a decline in the German benchmark index at the beginning of the third quarter. The DAX rose in mid-July on the back of speculation about rate cuts in the UK, strong labor market data in the US and rumors that the major US bank JP Morgan would prop up Italy’s banking system. In August, the Bank of England cut its key interest rate and announced a program to buy up government and corporate bonds. This, along with hopes of a gradual increase in interest rates in the USA, caused share prices to rise. Following a temporary dip, prices climbed over the further course of the third quarter, buoyed by the continued loose monetary policy of the Bank of Japan and the US Federal Reserve.

Reports about the banking sector weighed on the markets at the start of the fourth quarter. Positive economic data from China caused stock prices to recover in mid-October. Further on in the quarter, uncertainty in connection with the US presidential election and the referendum on constitutional changes in Italy generated price volatility. The ECB’s continuation of its expansionary monetary policy and the weak euro gave share prices a boost in December.

At the end of 2016, the DAX had reached 11,481 points, an increase of 6.9% on the previous year’s figure. The EURO STOXX Automobiles & Parts closed the year at 521 points, 4.1% lower than on the last day of trading in 2015.