BLBG: German Stocks Fall Most in Week as U.S. Bailout Fails
By Stefanie Haxel
Dec. 12 (Bloomberg) -- German stocks fell the most in a week on concern the global recession may deepen after a $14 billion bailout package for U.S. carmakers was rejected by the Senate.
Bayerische Motoren Werke AG and Daimler, the world’s biggest luxury carmakers, plunged at least 4 percent. Continental AG fell the most in a month after Handelsblatt reported Schaeffler Group, which is buying Europe’s second- largest car-parts maker, needs as much as 7 billion euros ($9.3 billion) in capital.
The benchmark DAX Index declined 184.4, or 3.9 percent, to 4,582.8 as of 9:39 a.m. in Frankfurt, the steepest retreat since Dec. 5. DAX futures expiring next week dropped 3.9 percent. The broader HDAX Index fell 3.7 percent.
The Senate thwarted the legislation yesterday after the bill passed the House on Dec. 10. General Motors Corp. may fail within weeks, followed shortly by Chrysler LLC, threatening millions of jobs in the world’s largest economy where initial jobless claims jumped to a 26-week high last week.
The collapse of bailout negotiations sends a “shock wave to suppliers,” Commerzbank AG analysts Daniel Schwarz and Gregor Claussen wrote in a research note to clients today.
“We estimate that GM, Ford and Chrysler currently have outstanding trade payables to suppliers of some $50 billion,” they wrote. “In case of Chapter 11, this could be an immediate harmful impact on suppliers. On top of this, suppliers might have to write down billions in euros of assets.”
Suppliers-Industry Hit
The DAX, which is still up 4.6 percent this week, has lost 43 percent this year as almost $1 trillion in credit-related losses and writedowns at finance firms worldwide push the economy toward a recession, damping outlook for earnings.
BMW, the world’s biggest luxury carmaker, sank 4.2 percent to 21.50 euros. Daimler, the second-largest, declined 6.2 percent to 23.56 euros.
The U.S. is the No. 1 market for BMW and the second-biggest for Daimler’s Mercedes-Benz. Both carmakers have factories there, and while they and other German brands control about 7 percent of the American market, they compete more with each other than with GM and Ford Motor Co.
Leoni AG tumbled 15 percent to 9.90 euros, the steepest slide in at least 10 years. Germany’s biggest maker of electrical cables for cars counts GM’s German division Adam Opel AG among its customers.
Auto Parts
ElringKlinger AG, an auto-party company that makes equipment for Fords and Volkswagens, plunged 4.7 percent to 6.12 euros, a three-week low.
Continental fell 5.3 percent to 35.42 euros, the steepest drop since Nov. 11. Schaeffler needs 4 billion euros to 7 billion euros “in the short term,” according to figures that investment bank Perella Weinberg presented in a supervisory board meeting of Continental on Dec. 10, Handelsblatt said, citing unidentified company officials. Schaeffler’s net debt amounts to 11 billion euros, the newspaper said, citing the Perella numbers.
To contact the reporter on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.
