German Analysts Undecided on Choice of Future Chancellor

He may have called a chat show host by the name of a former rival and forgotten the name of Deutsche Telekom – Europe’s largest telecommunications company –, but the Christian Democrat chancellor candidate Edmund Stoiber persistently continues to lead in voters' polls when it comes to economic efficiency.

Less clear, however, is how Germany’s business experts perceive the economic ability of the successful premier of Bavaria.

No grand coalition, please

According to Thorsten Polleit, head econmist at Barclay Capital, Germany’s brokers are still wavering on the question of Stoiber vs. Schröder.

However, what is clear is that they want a clear-cut election result: “A grand coalition (between the two main parties CDU/CSU and SPD) would be bad for the markets”, Polleit says, arguing that the ongoing political uncertainty and unpredictable general conditions following such a constellation would lead to an atmosphere unpopular with brokers. “An absolute majority would be more desirable”, he says.

Election already decided?

But according to Heinz von Mallek, Chief Analyst at the private bank Hauck & Aufhäuser, the decision on future German leadership has already been settled within stock market circles: “The brokers expect a Christian Democrat-Free Liberal coalition to win”, he says.

Mallek has his own ideas as to the political hues of German stock brokers: “Stock brokers are naturally not Social Democrats and a red-green coalition is not regarded as market friendly”, he told DW-WORLD.

According to von Mallek, it's a view which preveils among brokers, despite the red-green coalition’s introduction of major corporate tax reforms, which their (Christian Democrat) predecessors did not manage during their 16 year rule, and were widely welcomed by the German stock market.

In addition, von Mallek says, a winning Christian-Democrat-Liberal coalition “could lead to a market high”.

Impact of elections on markets overestimated

Bernd Janssen, head of German Market Research at UBS Warburg, says the decisive factor for an upswing or downturn of the German economy is the clear outcome of the election results: “A grand coalition would be bad for the markets”, he says - any other constellations would have no major impact on the development of the markets, he argues: “The differences between the parties are so small, that the election results are not expected to influence the stock markets”.

Indeed, the importance of the election results for the financial markets is completely overestimated, top economist at Barclays Capital Thorsten Polleit concedes. “The markets are increasingly based on international, and not national criteria”, he argues.

Concern and resignation

Whether the election results will influence the stability of Germany’s stock markets, remains to be seen on election day, September 22. But on one issue, it appears both national, and international economics experts are of the same opinion: the state of German’s trailing economy.

The recent flood, which devastated wide regions of Germany in the past week, has contributed to analysts’ dismal forecasts: “Expectations indexes have weakened, and I think growth will be weaker in the third quarter because of the flood”, Rainer Guntermann, economist at Dresdener Keleinwort Wasserstein told BBC Online.

Indeed, business experts do not expect growth, no matter who wins the elections, and the atmosphere is one of both concern, and resignation: According to to a recent election study by UBS Warburg “even political forces with a radical reform package to boost the economy would not win more votes”.