BASF and Lanxess: Next glimmer of hope
After three difficult years, the shares of the two chemical companies BASF and Lanxess have had a very good start to the new stock market year 2025. Although the market environment remains difficult, there are increasing glimmers of hope. According to the Bundesbank, German economic output grew slightly in the first quarter.
One reason for the slightly positive expectations at the start of the year is the recent somewhat stronger demand for industrial products and construction services. Private consumption could also increase somewhat thanks to higher wages. However, consumer sentiment remains poor, even in the face of slightly rising unemployment, so that savings are likely to continue to be strong. Exports could develop "somewhat less unfavorably" because anticipatory effects are to be expected in view of the threat of US tariffs.
In the medium term, the central bank sees the USA's tougher trade policy as a risk for world trade and the global economy. Mutual additional tariffs could escalate into serious trade conflicts, the analysis warns. What's more: "The increased uncertainty alone could dampen the global economy."
According to preliminary calculations by the Federal Statistical Office, German economic output shrank by 0.2 percent last year. This means that 2024 was the second year of recession in a row for Europe's largest economy. For the final quarter of 2024, statisticians have calculated that gross domestic product (GDP) fell by 0.2 percent compared to the previous quarter.
From the Bundesbank's point of view, however, the future federal government has plenty of room for additional debt. There is a need for action in the area of state infrastructure and the sustainable financing of defense spending. The debt brake does make an important contribution to ensuring solid public finances. "In principle, however, it is entirely justifiable to adapt the credit limit of the debt brake to changing conditions when the state debt ratio is low." What would be important here is a focused administration that makes decisions quickly and makes better use of the opportunities offered by digitalization.
The prospects for the battered chemical industry are at least looking a little brighter after three very difficult years. Since valuations are still at a very low level, those who are brave can still hold on to the two chemical stocks. The stop price for BASF should be left at EUR 39.00, and for Lanxess at EUR 21.50.
Notice of conflicts of interest:
The Chairman of the Board of Management and majority shareholder of the publisher Börsenmedien AG, Mr. Bernd Förtsch, has directly and indirectly taken positions in the following financial instruments mentioned in the publication or derivatives related to them, which can benefit from any price development resulting from the publication: BASF.
Contains material from dpa-AFX
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