Country Deep Dive: Germany’s export giants | DAX 30

Bryce: [00:00:14] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing, whether you're an absolute beginner or approaching Warren Buffett status, our aim is to help break down your barriers from beginning to dividend. My name is Bryce and as always, I'm joined by my equity buddy Ren. How's it going? [00:00:31][16.5]

Alec: [00:00:31] I'm very good. Bryce good to be back with you for another week. [00:00:36][4.3]

Bryce: [00:00:36] Yes, yes, yes. Content train keeps rolling. Look, we're here for a new type of episode. I don't think we've ever done a country Deep Dive before. We've done plenty of industry deep dives. But today we're going to be doing a country deep dove. [00:00:52][15.7]

Alec: [00:02:59] Let's talk about country Deep Dive. We have decided to start with Germany. And the reason for this episode was really, you know, every expert interview we play, overrated, underrated. We ask about the ASX 200 and what is the most common answer? [00:03:15][15.7]

Bryce: [00:03:16] Underrated. [00:03:16][0.0]

Alec: [00:03:17] No, you clearly not listening. [00:03:19][2.0]

Bryce: [00:03:20] Overrated bank is mine is boring opportunity overseas. Yeah. [00:03:24][4.5]

Alec: [00:03:26] The Australian market is full of bankers and miners. That that's the most common thing you [00:03:32][6.4]

Bryce: [00:03:32] hear about maybe banks, not bankers. [00:03:35][2.3]

Alec: [00:03:37] Sure. And you know, if you look at the index, that is true. The ASX 200 is 30 percent financial services biggest weighting and then 20 percent materials, which a lot of that is mining. So there's no doubt that the Australian market is full of banks and miners. So then we we got to wondering what what is it about other countries? Like what? What characterizes other stock markets around the world? And, you know, we often think of America and America. You really think tech, but what about the other how many countries, other states like to say, hey, yeah. So what about the other two hundred and fourteen countries? What Covid what characterizes their stock markets? So we figured we would try this kind of episode. A Country Deep Dive where we look at a major stock market index for a country and see what's in there and see what we can learn. [00:04:37][59.8]

Bryce: [00:04:37] Yeah, it's exciting as the world opens up, or particularly opportunities to invest overseas. So Ren, we're going to kick off with Germany home as we will soon find out to a number of very well known companies around the world. [00:04:50][13.0]

Alec: [00:04:51] OK, and what before obviously we've done some for this episode, but before we were doing the prep, if I was to ask you what what characterizes the German stock market? What character in the same way that banks and miners characterize the Australian stock market? [00:05:08][17.1]

Bryce: [00:05:08] Oh, OK. What would you have said? Automobile's. Yes. Yeah, where does that sit? [00:05:13][4.7]

Alec: [00:05:13] Well, all right. [00:05:14][0.5]

Bryce: [00:05:15] Well, we'll soon find out. Very good at at what's the word hanging off a cliff and [00:05:21][6.3]

Alec: [00:05:23] cliff [00:05:23][0.0]

Bryce: [00:05:26] cliffhangers cliffhangers. OK, so the major index in Germany is the DAX 30. [00:05:31][5.3]

Alec: [00:05:32] Yes. That stands for. [00:05:33][1.1]

Bryce: [00:05:33] Yes, it's I'm not going to be I don't think I'll be able to pronounce it in German, but the Deutsche I, I kinda I context [00:05:41][7.9]

Alec: [00:05:43] know about all of this [00:05:44][1.0]

Bryce: [00:05:45] or in other words the German stock exchange. [00:05:47][1.6]

Alec: [00:05:47] But the DAX is the 30 major German blue chip companies trading on the Frankfurt Stock Exchange. They go. But the European Stock Exchange is weird because I have like that extra and then there's like the euro. Yeah, but Frankfurt Stock Exchange. [00:06:04][16.2]

Bryce: [00:06:04] So pretty concentrated index, I guess. Yeah, 30 stocks. The Frankfurt Stock Exchange is the 12th, the largest stock exchange in the world by market cap coming in above Australia, I would guess. [00:06:17][12.5]

Alec: [00:06:18] Would you. Yeah, I would think you're right. I'm just going to quickly fact check you and you're right. [00:06:27][9.1]

Bryce: [00:06:30] Another interesting fact, Ren. It is one of the few major country indices that takes into account dividend yield. [00:06:38][7.6]

Alec: [00:06:39] Yes. So for for context, the ASX 200, when you're measuring the return over time, it doesn't take into account the dividends that are paid. There's a separate index, the ASX 200 accumulation index or something like, yeah, that calculates it, including dividends. It appears that the DAX just takes into it and takes into account dividends. [00:07:03][24.2]

Bryce: [00:07:04] Yeah, total return. So that's that's good to know. So you spoke about weightings at the start or asked the quiz question, what would we think is its correct or what are the major sort of, I guess, characteristics or [00:07:15][11.9]

Alec: [00:07:16] and you said well we both said automobile's. [00:07:18][1.4]

Bryce: [00:07:19] Yes, I had it had that go. [00:07:20][1.2]

Alec: [00:07:20] Well, I can tell you that of the DAX 30 automobile's is number two, 12 percent of the index. OK, we'll get into the companies in a sec. Number one is chemicals, right? 17 percent. OK, then automobile's industrial 11 percent. Insurance, 11 percent. Software nine percent. Pharmaceuticals and health care eight percent. Financial services six percent. [00:07:45][24.7]

Bryce: [00:07:45] Can you name a German chemical company. [00:07:47][1.8]

Alec: [00:07:48] Yeah, BSF. Well, I never heard of it. No dammit, it's BASF. I should have gone with the biggest in the world. Well biggest in Germany. I think the biggest in the world is Linda. Linda. [00:08:02][14.4]

Bryce: [00:08:03] Linda. Yeah. [00:08:03][0.6]

Alec: [00:08:04] Linda. Yeah. I don't know about you but I mean my big takeaways from that are there is a lot more manufacturing in Germany than there is in Australia. Yeah, Australia loves a raw materials. We love fracking, good farmland, drilling oil in the ocean and mining coal and then sending it overseas. The Germany the Germans like making that stuff [00:08:34][30.5]

Bryce: [00:08:35] and [00:08:35][0.0]

Alec: [00:08:35] exporting. I remember a few years ago there was a big push around Industry 4.0 in Germany and they they wanted to really be on the forefront of Internet of things, advanced manufacturing, all of that stuff, their big export economy, which we'll get to. But they they want to be a manufacturing powerhouse of Europe. [00:08:55][20.4]

Bryce: [00:08:56] Yeah, interesting. So if you're looking for exposure to chemicals, automobiles, industrials, definitely worth having a look at the DAX 30. How has it performed? We've obviously seen markets significantly recover over in the states here in Australia since the Covid drop as well. We've done pretty well to get back to a level playing field. The DAX though year today it's up only 11 percent. [00:09:24][28.1]

Alec: [00:09:24] Yeah, European numbers are just always soft. And I always like I have some European investments because I'm always like Europe's going to Europe. You're just going to come at some point. Europe is going to come. But it just it just pales in comparison to America. Yeah. So so 11 percent year to date, covid it fell. Thirty five percent recovered seventy percent. So basically got back to square, but the past five years up fifty percent for context. The American S&P five hundred past five years, what do you think its number is. So Germany's fifty percent, the S&P 500 for the [00:10:01][36.4]

Bryce: [00:10:01] past five years to fifty [00:10:03][2.1]

Alec: [00:10:04] two hundred fifty percent. [00:10:04][0.6]

Bryce: [00:10:07] Now let me think about this. Let me think about this. I'm going to go. Easily over 100 percent, I think. [00:10:12][5.4]

Alec: [00:10:13] Well, exactly 100 percent. OK, so the US stock markets doubled. The German stock market has added 50 percent. What about the Australian ASX 200? [00:10:23][10.1]

Bryce: [00:10:23] It's kind of weak as well over the last five years. 70 percent. Thirty three percent. Oh, Aussie, Aussie, Aussie. [00:10:33][9.9]

Alec: [00:10:34] So. [00:10:34][0.0]

Bryce: [00:10:36] OK, so DAX performing better than the ASX here. So in the third quarter of twenty twenty one, the DAX will be expanding from 30 companies to 40. Yes. Good to say so. [00:10:48][11.9]

Alec: [00:10:49] I don't know. [00:10:49][0.3]

Bryce: [00:10:51] Sorry, you've mentioned the Industry 4.0, so let's take that as an opportunity to actually take a step back here and look at economy, the economy in Germany more broadly. So do you want to, I guess, expand on that? [00:11:04][12.4]

Alec: [00:11:04] So if you ever listen to the news and there talking about the EU, any negotiations, anything like that, there are two big powerhouses in Europe, which is France and Germany. Germany is a particularly large exporter and as we've mentioned, trying really hard to be on the forefront of advanced manufacturing. So it's the largest national economy in Europe. Twenty eight percent of the euro area per the IMF, but it's actually one of the largest exporters globally. You heard Trump complain about America's trade deficit a lot. Germany actually has the largest trade surplus. Oh, they go bigger than China. Yeah, Germany. Yeah. So a big exporter relative to its imports. Top three exports, cars, cars, number one machinery. Number two, related to cars and then chemical goods. Number three. Well, yeah. And Linda and GSF. Yeah, yeah. This was an interesting stat that I found of the world's two thousand largest public companies measured by revenue. Fifty three headquartered in Germany. [00:12:17][73.4]

Bryce: [00:12:18] Nice. Where would that stand against America? [00:12:21][2.8]

Alec: [00:12:22] Don't ask me any follow up questions because I didn't do any more research. But I mean, the top the top 10 are pretty well known companies. OK, some that you may not actually know how well you know them. OK, no, none. None of them. So Allianz. Yes. Insurance. Yeah, Daimler. Now I know it. Mercedes Benz. [00:12:46][24.2]

Bryce: [00:12:47] Oh, there you go. What parent company. Yeah. Oh no. [00:12:50][2.9]

Alec: [00:12:50] It's Volkswagen [00:12:50][0.4]

Bryce: [00:12:52] cars. [00:12:52][0.0]

Alec: [00:12:53] Siemens industrials. Yeah. Like machinery and yeah that BMW cars. Deutsche Telekom [00:13:01][7.9]

Bryce: [00:13:02] Telecom. [00:13:02][0.0]

Alec: [00:13:04] There's a big company Masterbrand. Massive US company [00:13:07][2.8]

Bryce: [00:13:11] AT&T. [00:13:11][0.0]

Alec: [00:13:11] No T-Mobile. Our T-Mobile owned by those guys. Bayer. Yeah. Pharmaceuticals Covid them for BASF which is chemicals. We've talked about Munich Re. Massive insurance company. Yeah, the software. Yeah, and there's one other that isn't in that top 10 list, but I want to mention Deutsche Post [00:13:35][23.9]

Bryce: [00:13:36] owns [00:13:36][0.0]

Alec: [00:13:38] Decco Nilda. Yeah, yeah, yeah, yeah. It's like Australia Post owning FedEx. [00:13:43][5.1]

Bryce: [00:13:44] Yeah, sure. So some pretty big company. [00:13:48][3.9]

Alec: [00:13:49] Pretty big companies. Yeah. Here's a fun fact. Germany is the world's top location for trade fairs with two thirds of the world's leading trade fairs taking place in Germany. [00:14:02][12.9]

Bryce: [00:14:03] Honestly, I am surprised by that. But now that I think about it, a lot of people in my team when I used to work at Woolworths would be jetting across or supplies particularly. They'd be always jetting across to China. [00:14:14][11.0]

Alec: [00:14:14] Yeah, yeah, yeah, yeah, yeah. Well, I just when I think trade fairs, I would have thought, like, it's fair. Yeah. But I guess that's probably not so like German I would think would have a real database flavor about it. Yes. [00:14:30][16.3]

Bryce: [00:14:33] So Ren, before we take a look in a little more detail at some of the companies that make up the DAX 30, particularly the top 10. Let's just take a quick break to hear from our sponsors. So, Ren, you mentioned some of the companies that make up in terms of revenues headquartered in Germany. Let's take a bit of a dove, actually, into the DAX 30. We'll look at it from a weighting point of view at the top 10 because there are some notable companies missing. If you're looking at it from a weighting point of view, yeah. [00:15:04][30.3]

Alec: [00:15:04] Now, before we get into the weightings, I want to put a call out. I want to use the platform that we've built at Equity Mates to put the index builders on notice. OK, make it easier to find UP-TO-DATE weightings of your holdings. The the really you got to go through the ATF providers to just say what the holdings and their weight are all down the list. I don't want just top 10. Yeah, just give me just publish it, put a press release out, put it on your website. You publish factsheet after factsheet after factsheets hypoplastic. You'll put charts of performance over time. Give me a list of holdings and Whiting's and Whiting's. Yeah. Yeah. [00:15:46][41.7]

Bryce: [00:15:46] You want the weightings. [00:15:47][0.4]

Alec: [00:15:47] I want the weightings. Yeah. Yeah. Because the whiting's I found were out of date. And if someone who works in the industry comes and tells me just get a Bloomberg terminal, I don't want to hear [00:15:56][8.7]

Bryce: [00:15:57] read where we use ticket for this one. Right. [00:15:59][2.1]

Alec: [00:16:00] No ticket. Don't have index weightings. OK, so Tyga were great for what the companies do. Market caps like ticker's great for individual company stuff like. So I pulled a bunch of data about the companies from Tica. Maybe they do have indexes and I couldn't find it. But that's a little gripe that I want to put on the record and I want S&P or other index filter so I can't think of right now to do better. [00:16:25][25.1]

Bryce: [00:16:25] And just a reminder, Tica is the data service that we use here at Equity Mates Tik-tok. It's pretty phenomenal. Gives you all the information you need, transcripts for earnings calls, you name it. It's all there. They've also just launched a new screening capability as well. So head to ticker, dot com Equity Mates. That's going to give you exclusive access because it is in beta at the moment. T ic dot com Equity Mates. But Ren sorry, continue. [00:16:54][28.6]

Alec: [00:16:55] So biggest company in Germany. What do you think it is [00:16:58][3.2]

Bryce: [00:16:59] biggest company in Germany? Well, we've said, Lynn, that a lot of time. So I'd have to go with that. [00:17:04][4.2]

Alec: [00:17:04] Yeah, you'd be wrong. [00:17:05][0.8]

Bryce: [00:17:05] Oh you're quite so biggest company by market cap. Yeah. [00:17:08][2.5]

Alec: [00:17:10] Volkswagen know its third biggest [00:17:13][2.3]

Bryce: [00:17:14] wow, not SAP. [00:17:15][1.5]

Alec: [00:17:16] Yeah, is it do you call it SAP or do I pay? [00:17:19][3.0]

Bryce: [00:17:20] I hate SAP [00:17:21][0.6]

Alec: [00:17:21] in some way. We have bad experiences. We worked at big companies. Like it's an annoying thing to use you, but you leave through SAP. Yeah, God, they're ingrained in people. [00:17:35][13.5]

Bryce: [00:17:36] So they're an enterprise software company. And by market cap, at time of recording, mid July 22nd of July is the largest in in Germany. [00:17:44][8.4]

Alec: [00:17:45] Yeah. One hundred and seventy billion US day market cap, which is big don't get me wrong. [00:17:51][5.8]

Bryce: [00:17:51] But it's not huge. It would be. [00:17:55][3.2]

Alec: [00:17:55] Is it bigger than come off. [00:17:56][0.8]

Bryce: [00:17:56] Think it would be the biggest Commonwealth banks. One seventy six at the time of recording. [00:18:00][4.1]

Alec: [00:18:01] Are you still us. Do you do so USA. It's I'm not going to do some quick math here. About one twenty nine. One twenty eight. So it's bigger sap. Yeah. Yeah. So yeah. Biggest company. Enterprise software. Next biggest is Linda. One forty seven billion. Now both of these two companies are about 10 percent of the index, at least from the most recent data that I could find. But don't get me started on that graph again, Linda. So industrial gases, you don't really think about it, but that it's just used so much. You know, they sell oxygen, nitrogen, argon, carbon dioxide, hydrogen, helium. It basically sounds like the start of the periodic table. [00:18:46][44.9]

Bryce: [00:18:47] Yes. [00:18:47][0.0]

Alec: [00:18:49] And they they also design and build processing plants that create these gases or, you know, synthesize these gases into other material. But like the use of these gases is pretty broad health care, petroleum refining, stuff like that, manufacturing, food and beverage, carbonation. They go, yeah, you know, steel making, aerospace, electrics, chemicals, water treatment. We use a lot of chemicals in modern society. And Linda is right at the forefront. [00:19:20][31.5]

Bryce: [00:19:21] Yeah. So Ren, it's actually not only one of the biggest on the index, but it's the largest industrial gas company by market share and revenue in the world. So a pretty big company. And that's why we like doing these deep dives. What is next on the list? [00:19:36][14.9]

Alec: [00:19:37] Next on the list is in terms of market cap today, Volkswagen. I love it. Volkswagen has had a bit of a massive tear. You're a big fan of Volkswagen trying to give us the list of its brands. [00:19:51][13.2]

Bryce: [00:19:52] Absolutely. Volkswagen is the number one brand. [00:19:55][3.1]

Alec: [00:19:56] Okay, okay. [00:19:57][0.5]

Bryce: [00:19:58] Then they do other known brands such as Audi, Skoda, Lamborghini, Porsche, Bentley, Bugaldie, Du Cadie, Bugaldie, Bugatti, Bugaldie, and you can see the motorbike brand. So looks and pretty well known, I would say luxury brands in there. Yeah. But also, yeah. Volkswagen, the biggest car manufacturer in the world, pumping out cars. [00:20:23][24.9]

Alec: [00:20:24] There you go. Biggest in terms of cars produced. [00:20:26][2.4]

Bryce: [00:20:27] Yes. In terms of cars produced. The largest manufacturer in the world, obviously Tesla. If you're looking at market cap, Tesla sitting out somewhere around six hundred million. Six hundred billion. So it's certainly not a market cap. All right, what else do we got? [00:20:39][11.7]

Alec: [00:20:39] So next up is Seamans, which is all about Industry 4.0 industrial automation machines, Internet of Things. [00:20:48][8.5]

Bryce: [00:20:49] It's this one's popped up a few times when we've done watchlist Wednesdays and stuff on Siemens. [00:20:54][5.4]

Alec: [00:20:56] Siemens has a spin off business, Siemens Energy, which makes a lot of, I think, renewable energy. [00:21:03][7.2]

Bryce: [00:21:05] Generation, that's right, it was in the carbon capture conversations that we've been having, [00:21:09][5.0]

Alec: [00:21:10] so, yeah, a massive company, let's just rip through a few and then we get into some not so not so interesting ones. Oh, we actually forgot Mirch. Big pharmaceutical, yeah, [00:21:23][12.7]

Bryce: [00:21:24] is obviously up there as well, but these aren't in the top 10 most Wagoneer, Merck, [00:21:29][4.8]

Alec: [00:21:29] Merck is [00:21:30][0.4]

Bryce: [00:21:30] in terms of money. [00:21:31][0.5]

Alec: [00:21:31] Yeah, yeah. But yeah, Allianz is next in terms of market cap. Deutsche Telekom, which is as we mentioned, is I guess like Germany's Telstra ISP. Yeah. But like around the world standard. Well, overseas has [00:21:51][19.9]

Bryce: [00:21:52] made good acquisitions. [00:21:52][0.5]

Alec: [00:21:56] Allianz insurance, bay'ah, life sciences, pharma, pharma, health. And then also they acquired Monsanto. [00:22:02][6.8]

Bryce: [00:22:05] Adidas. Yes. I say Adidas [00:22:07][2.2]

Alec: [00:22:08] really decide, like [00:22:09][1.0]

Bryce: [00:22:10] I say, Nike. Oh, it's I don't know what is it anyway? Let's not get bogged down in that as data. I've heard both. So for those who are very unaware that the athletic company of sports attire and bits and pieces [00:22:23][13.0]

Alec: [00:22:24] so data 70 billion dollar market cap what you can Nike's market cap is [00:22:28][3.7]

Bryce: [00:22:30] ninety eight. [00:22:30][0.5]

Alec: [00:22:31] Nine is not 250, is it. Yeah, yeah. Actually you know the story of a data in Puma. No, I think it's Puma that we like founded by brothers are they go. Yeah. And they had a massive rivalry. They were on like different sides of like some river in a small town in a German German city that I'm not going to be able to tell you which one it is. But like, look it up, Adidas, Puma rivalry's. It's it's a really interesting little family. Yeah. I think they probably must have started together and then split the business, but pretty successful family like that. Everything that family can make. Sports apparel. Yeah. All right. Anyway, back to the the DAX BASF, which is a 70 billion dollar chemical maker. So they make like plastics, petrochemical, stuff like that. Deutsche Post. Eighty three billion owner of DHL would love to see Australia Post if Australia Post and Telstra could become the Deutsche Post and Deutsche Telekom would be cheering. I would say that those are useless. Yes. And then to round out the top ten, we've got a little bit of a roundabout way. But Daimler, Daimler. Daimler. Yeah. Which owns Mercedes Benz and a few other bigger car companies. [00:23:58][86.7]

Bryce: [00:23:58] So that reminder that top ten was based on waiting. As we've mentioned, there's Volkswagen and Merc to massive companies in terms of market cap that aren't in that top ten. [00:24:08][10.1]

Alec: [00:24:10] So this is just a bit confused. This goes back to my gripe with, oh, you may not dated for the updated figures because the market cap stuff is up to date. I pulled that from Ticky yesterday. The weightings are of September twenty twenty because that's the most recent data. [00:24:25][15.1]

Bryce: [00:24:26] Makes sense. So, yeah, they should be out there, you would imagine so. [00:24:29][3.2]

Alec: [00:24:30] S&P ReachOut [00:24:30][0.9]

Bryce: [00:24:33] nice. Well, no doubt that there's plenty of notable companies in their Ren and we have spoken about some of the show simmons' before Siemens buy, obviously. And of course we've spoken about Volkswagen as well. So I'd love to see it go Germany. [00:24:47][14.2]

Alec: [00:24:48] So there's a few other notable companies that I want to touch on outside the top ten. And then there's a few takeaways that I was thinking about this top thirty. So we mentioned Volkswagen and BMW, BMW owners, obviously BMW, but also Mini and Rolls-Royce, which you both do. You think of both British brands, Merck, we mentioned Deutsche Bank, big investment bank delivery hero, which is like, I guess Europe's Uber, right? Yeah. And then Continental. [00:25:18][29.9]

Bryce: [00:25:19] Continental, like the hotel tires. Tires. Oh yeah. [00:25:23][3.5]

Alec: [00:25:23] True, true. Yeah. They don't. Aren't you the guy who keeps telling me to watch drive to see what drive to survive here. [00:25:29][5.7]

Bryce: [00:25:29] They don't need continental tires surely. [00:25:30][1.2]

Alec: [00:25:30] I don't [00:25:30][0.1]

Bryce: [00:25:32] think they do actually [00:25:33][0.5]

Alec: [00:25:33] there would be some would be some continental ties floating around, maybe just piled up on the on the turns. My biggest takeaway from this list, though, and obviously it's not a complete list, but not a lot of new economy companies. If you think about like the US index, it's dominated by companies that have been founded in the last thirty or forty years [00:25:56][23.4]

Bryce: [00:25:57] or even less in the last year. [00:25:58][1.3]

Alec: [00:25:59] If you think about Australia's index, it's pretty boring and there's not a lot of new economy companies like. But there are some you know, starting times you've got like Ariah Group, you've got say got car sales, you've got Afterpay. There's a few in their delivery heroes stood out to me as a company that wouldn't have. Existed, you know, when I was born or when our parents were our age. [00:26:25][25.3]

Bryce: [00:26:26] Yeah, stop kicking a while. [00:26:28][2.3]

Alec: [00:26:28] I reckon it's been a while. Yeah. Um, but a lot of these other companies are massive and have been around for a while. The next the second takeaway for me was a lot of exporters. Yeah. So, you know, if Australia has a reputation of making lattes and selling houses to each other like a reputation, I've heard it or if I haven't heard of coined it anyway, I'll take it easy. Picking locks and selling houses, making lattes and selling houses to each other, you know, like a very internal fighting, consumption driven economy. Germany, I think you can fairly say, is a is a big exporter. Massive. Yeah. So you've got, you know, like Linda with industrial gases and then BASF with like chemicals and plastics and stuff like that. SIOP Exploding Technology, Bayer and Merck, chemicals and pharmaceuticals, Adidas Clothing, Volkswagen, Daimler, BMW, cause like there's a lot of export driven companies there. And what is what does that mean? I mean, first of all, that they've got it, I guess a bit of a diversity outside of they're not reliant on the German economy in some ways, you know, like there's a diversification in the revenue streams. The second thing is that that they're truly like big global companies in their in their scale, I guess, in their ambitions. And you're not you're not thinking about like what the German market. Is it the mark? Well, it's really just the euro, isn't it, at this point, currency wise. Yeah. You're not just thinking about, like what that's going to do for these companies. You're thinking about, you know, what's their customer base look like? Is it you know, is it majority us? Is it China or is it the UK? Is it Australia? Like where are their customers, what are their currencies? How does that convert? And then who are the international competitors for a lot of these companies? So for Adidas you're not thinking about. German competitors, except for Puma, you're thinking of Nike and stuff like that [00:28:42][134.2]

Bryce: [00:28:43] in and I guess another takeaway Ren that we've already mentioned is, I guess, how very different it is to the Aussie index. We're heavily weighted with financials, the biggest weighting at 30 percent. The DAX financial services is only six percent. And here in Australia, materials like mining is 20 percent of the ASX 200, but it doesn't even feature in the DAX. Germany is a bit more of a value added economy rather than let's dig it up and ship it out. [00:29:13][30.2]

Alec: [00:29:14] Yeah, and I think, you know, there's there's been a lot of talk in Australia about becoming better with advanced manufacturing and that Germany is a very different country to Australia, like Australia is massively blessed with natural resources. Germany, not so much. Germany is like it is reliant on, you know, natural gas from Russia and, you know, like imports, energy and all of that stuff. But what it has managed to do is create a very strong economy by adding value rather than being reliant on raw commodities [00:29:48][34.8]

Bryce: [00:29:49] or just on that, it's actually ranks the most innovative company in the world, according to the annual index, which is created by Bloomberg [00:29:57][7.2]

Alec: [00:29:57] Innovative Country, [00:29:58][0.5]

Bryce: [00:29:58] sorry, as I said, company, innovative country in the world. According to the annual index created by Bloomberg and some of the key inputs into that, they assess over 200 economies against seven metrics and things like intensity of R&D, research and development, patent activity, the level of tertiary efficiency in education and to your point, Ren manufacturing value add. So, you know, manufacturing output levels contributing to GDP, level of productivity and then obviously things around research and and high tech as well. So they've got it going and subsequently find themselves at the top of the list for all that sort of stuff. [00:30:43][44.5]

Alec: [00:30:44] I don't want to say that this is causative, but I like the fact that the leader is a scientist as well. Is she? Yeah, she's got a doctorate in quantum chemistry. Nice. [00:30:54][10.5]

Bryce: [00:30:57] And Gomo from marketing. [00:30:59][1.7]

Alec: [00:31:00] I just I obviously you don't need to be a PhD or, you know, a chemical engineer to to be a good leader. But I like it helps. Let's say it doesn't hurt. Yeah. [00:31:14][13.6]

Bryce: [00:31:15] Now, before before we just close off with a quick convo around how we can invest in Germany, do we want to touch on any recent controversies on the Dow? [00:31:24][9.0]

Alec: [00:31:25] Yeah, I figured we couldn't talk about Germany without talking about a company that was in the DAX that was a darling of Germany. It was maybe a new economy company that is so lacking from the German index and then it all fell down. What happens? Have you heard of why? God. [00:31:41][16.1]

Bryce: [00:31:41] No, no. I'm thinking of a like an online publication. But it's not that, is it not? [00:31:49][7.0]

Alec: [00:31:49] OK, so why A was a massive German payments processor? Financial services provider was in the Dutch study was like a real story of entrepreneurial success, I guess you would say. Then it all fell down in twenty twenty after the company announced that one point nine billion euros in cash was missing, missing, missing. Subsequently, the former CEO say, ooh, two board members and other executives have either been arrested or otherwise implicated in criminal proceedings. So obviously that's that's still ongoing. But like, yeah, a few billion dollars euro went missing. Just got to win. This is this is from memory. So this could be incorrect. But I think it went via the Philippines and then it went then it was gone. Wow. Yeah. So why cod? And I think we should shout out John Hampton. Australia's. Yeah. Australia's to cover it. Yeah. Wow. Too busy uncovering that to come on our show but. Oh yeah he he was one of the ones I think talking about it. There you [00:33:02][72.6]

Bryce: [00:33:02] go. There, there is value in short selling. Yes. When it comes to exposing such criminal behavior. [00:33:08][5.8]

Alec: [00:33:09] Well allegedly. [00:33:09][0.4]

Bryce: [00:33:10] Allegedly, allegedly criminal behavior. All right. So I guess the big question is, Ren, we've spoken about some of the very well known big companies in the docks. There's no doubt a lot of them are not only leaders within Germany, but leaders around the world, that global companies providing plenty of opportunity to get some exposure and investment in. But the question, if you're here in Australia, how can we actually do it? [00:33:33][23.2]

Alec: [00:33:34] Yeah, it's tough. It is. So there's some Bryce. Because that allow you to invest in Germany, I j interactive brokers think Comsec over the phone, perhaps a tauro, [00:33:48][13.8]

Bryce: [00:33:49] perhaps not betrayed. [00:33:50][0.6]

Alec: [00:33:50] Yeah, over the phone. So check with your broker. But the majority of them don't yet. [00:33:56][5.2]

Bryce: [00:33:56] We're campaigning here. Equity Mates [00:33:58][1.4]

Alec: [00:33:58] don't start. This whole episode is a not so subtle campaign. You want to. We want to put the pressure on. Yeah. [00:34:04][6.2]

Bryce: [00:34:05] Look at brokers. The hate will be coming from the Equity Mates community. We don't want just us. We don't want just Australia. [00:34:11][5.8]

Alec: [00:34:11] Hey, wait here. It really doesn't don't think there's opportunities. Another part of the world. How are you doing? These country does and keep talking about those companies. But look, there are there are other ways outside of the broker space. So ETFs, there is nothing on the ASX that directly tracks the DAX 30. There are a few European ETFs that feature some of these companies, though. So iShares S&P, Europe, ASX Ticker, IAU, Vanguard, Footsie Europe shares ASX to convey AQ ETF Securities Euro stocks and that stocks are the double X ASX ticket a x beta shares Europe currency hedged ASX Ticker H a you are so if you are interested and then I guess more general European exposure to some of the options you can check out. Now, a lot of our brokerages these days also allow us to buy US shares in the same way that we buy Aussie shares. So I jumped over. Not really over the pond, over the vast sea and how to look in the US. There's one US ETF that I could find that tracks the DAX 30 directly global ex DAX, Germany, Nasdaq, Tica, DAX. And then there's a few options in the US that focus on Germany more generally. Three from iShares iShares MSCI Germany iShares Currency Hegde MSCI Germany. Note that's currency hedged in the US dollars because it's listed on the US and then iShares MSCI Germany small cap. So there's a few options in the ATF space, but for me it's a fascinating country. It's a country that you took. My big takeaway is you talk about those companies and their sort of world leading in their fields. You know, you are obsessed with Volkswagen. You wear Adidas all the time. Not true. You you have a stockpile of lyndy gases, [00:36:19][127.7]

Bryce: [00:36:21] takes the pharmaceutical benefits, [00:36:22][1.6]

Alec: [00:36:24] the big companies. DHL is obviously on a tear with everyone buying stuff online. T-Mobile is one of the biggest telcos over in the US. Allianz is a massive insurer. Munich Re is a big insurer. There's a massive German companies. But when we spoke about how much the index grew over the last five years, it's been half of the US. And I think that just shows how dominant the top of the US market has been as Apple, Microsoft, Amazon, Facebook in like Netflix and stuff like that. I have just just put everyone to shame, but also probably created an unrealistic idea. Of what we can expect, yeah, for the rest of our investing lives, like we've lived through the golden moment of some of these. Yeah, absolutely. Yeah. So I think, you know, long continue and long may we benefit from it. But these companies aren't slouches. No. Yeah. [00:37:24][60.5]

Bryce: [00:37:25] Yeah. So it's if you've really if you've enjoyed the country, Deep Dive would like us to continue. We'd love to hear from you. If you want to send some ideas of other countries and other indices that you want us to have a look at, it would be great to hear from any Equity Mates who are over in Germany. Tell us what you think of the opportunities and considerations that we may have missed. And we also hope that you're doing well this far away from the Aussie shores. Send us an email at contact at Equity Mates dot com or don't forget to join the discussion in our Facebook discussion group. Also, just a reminder, if you want more of a back to basics of international investing or just need more podcasts in lockdown, we've just finished a three part series on Get Started Investing feed all about global and the girls over you are in good company, have just done a special on international investing as well. So search your podcast player for both those podcasts. Don't forget to order our book online, but as always, Ren, it's great to chat stocks and we'll be back next week. [00:38:20][54.8]

Alec: [00:38:21] Sounds good. Should have looked up how to say that in German. [00:38:21][0.0]

[2009.0]