Head of equities at Woodman Asset Management
Angela Merkel's party has lost slightly more seats than anticipated. Still, the government is going to be formed by her party and the most probable coalition partners for the CDU/CSU are the FDP and the Green Party. The coalition building will be a lengthy process, especially as the Greens have policies that differ from other parties. AfD, which surprisingly gained quite a lot of ground with almost 14%, will be in opposition alongside the SPD.
We think the coalition will be rather industry friendly. However, several sectors will come under pressure in the short term. This could include the German automobile sector, as the Green Party might take a more aggressive stance on diesel. We don’t invest in traditional car makers and prefer electric vehicle manufacturers.
We don't see any impact of the elections on our clients because we don't expect a real shift in the policy from the new government. We did fairly little compared with previous major political events such as the Italian referendum and the French elections. We have been overweight the euro area since the end of last year and Germany in particular since the beginning of 2017 and we didn’t change that.
Our exposure to the German market it currently 17%. We mainly invest in German small and mid caps, including an industrial name, Noma, a real estate company, Deutsche Wohnen, and a silicon producer, Wacker Chemie.