Stock market speculation – billions of bets against the German bank – economy

Many hedge funds are investing a lot of money in falling prices – even though the stock is already cheap like never before.

If there are some international hedge funds, the decline of Deutsche Bank is far from over. They believe in even lower stock prices – and are betting a lot of money on them. For example, at least four hedge funds set up short selling positions of 5.07% of Deutsche Bank shares, as evidenced by the mandatory advertisements in the Federal Gazette. On the basis of the current price, this results in a volume of more than a billion euros

The fact that investors take the risky gamble of falling prices is neither unusual nor directly dangerous for Deutsche Bank. The extent to which these bets have now accepted, but in Frankfurt, but worry. Whatever the case may be, the title of Deutsche Bank is currently cheap, but since the beginning of the year, it has lost 40% of its value. This is a clear sign that professional investors are banking on a further drop in prices with such a high level of commitment: according to their badessment, the bank has not yet gone through its crisis. On the contrary, even at a price currently well below ten euros should be further down. In their best days, before the financial crisis, a share of the largest German financial institution was worth almost nine times more.

With short selling, investors try to take advantage of lower prices by a small detour. For a period of time, they lend themselves to securities, such as stocks, and sell them on the stock market. If the price of the respective paper falls then, they can be purchased cheaper and returned to the lender on the agreed date. The difference is absorbed by the investor, the higher the price slip, the higher the profit. In the meantime, if the price increases in the meantime, the bet is lost, the redemption costs more than the sale.

The hedge funds involved in Deutsche Bank's case do not consider the risk of significant price increases to be too high. Whatever the case may be, Frankfurt 's money has not come to rest for weeks. Only Christian Sewing was installed in April rather bumpy as John Cryan 's successor as president of the bank shortly after the announcement of an embarrbading 28 billion euros embezzlement in a computer collapse, thousands of jobs deleted and stress test bank conducted by the US Federal Reserve. In addition, they could soon get off the prestigious Euro Stoxx 50 index, which brings together 50 large companies listed in the euro zone. And the price of the action?

Falling and falling (see table). Faced with difficulties, Sewing eventually even consulted the advisers of its majority shareholder Cerberus to support the renovation of the house. They are not considered delicate when it comes to painful cuts. And by the way, Cerberus is not allowed to trade Deutsche Bank shares for the duration of the mandate. At least on this side, rest for the moment.