New Government's Large-Scale Investment Plans
Drive German Stock Market to Record High
The German stock market has reached a new all-time high, buoyed by expectations of large-scale investments from the new government. Although it was once shaken significantly by tariff pressures from U.S. President Donald Trump, it has recovered all losses thanks to the resumption of tariff negotiations and moves toward expanded government spending.
According to the Frankfurt Stock Exchange on May 9 (local time), Germany's benchmark DAX40 index rose as high as 23,520.50 points in the morning, surpassing its previous record high of 23,380.70 set on March 18.
The German stock market had once dropped by as much as 15.87% from its peak last month when the United States intensified its tariff measures. However, tensions eased recently as the United States entered into tariff negotiations with China and news emerged of a trade agreement with the United Kingdom. During this period, the index recovered all of its previous losses.
In addition, the large-scale defense and infrastructure investment plans promised by the newly formed German coalition government are further boosting investor sentiment. The German government announced that it will operate an infrastructure fund worth 500 billion euros (approximately 740 trillion won) over the next 12 years. The defense budget will be executed as an exception by lifting the constitutional debt limit regulation, effectively allowing for unlimited investment.
Expectations for government policy have also affected individual stocks. Rheinmetall, a leading defense company, has seen its share price surge by 183% so far this year and has risen to seventh place on the German stock market by market capitalization, surpassing major automakers such as Mercedes-Benz, Volkswagen, and BMW.
German public broadcaster ARD reported, "A fear of missing out on the gains is driving the rally. Warnings about market overheating are being ignored."
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