Porsche 2006 Annual Report Download - page 38

During this review period, international stock markets experienced an upturn such
as they had not seen in years. The unexpectedly sharp rise in share prices was
mainly driven by the excellent earnings situation of many companies and the eco-
nomic boom in the euro zone. The German economy, finally experiencing progress
at home in addition to its traditionally high exports, became Europe’s economic
motor. Doubts about further growth of the global economy were raised only in
America. However, given that many market observers keeping track of the cooling
US economy assumed there would be a soft landing rather than a crash, no further
obstacles barred record stock values.
At the beginning of the Porsche 2006/07 fiscal year, the German Stock Market
Index (Dax) continued the trend of the previous period. After effortlessly surpass-
ing the 6,000 point mark in September, sights were soon set on the 7,000 point
target for 2007. A setback in March, pushing the Dax under 6,500 points, was
quickly forgotten. At the end of April, a six-and-a-half year high was reached with
7,430 points, while the Dow Jones Index in New York cleared the 13,000 point
hurdle for the first time. On Friday, July 13, 2007 the moment had come and the
German Stock Market Index hit 8,151 points during the trading session, a higher
value than ever before. Nevertheless, there was little euphoria on the stock mar-
kets as many traders saw further risks appearing on the horizon. The biggest
threat was the crisis on the US mortgage market. Many banks had been very
generous with lending to property buyers in the past, dishing out subprime loans.
As long as US property prices continued to rise and borrowers did not get into
any difficulties, this posed no problem. However, at the end of July 2007, when
the first banks were forced to admit to serious problems caused by default repay-
ments, the Stock Market Indices were also pushed significantly lower. On July 31,
2007, the last day of the Porsche 2006/07 fiscal year, the market indicator
stood at 7,584 points.
Over the course of the review year, the price of Porsche stock rose to a level
eclipsing all previous developments. On August 1, 2006, the value of a share was
761 Euro, rising to 1,340 Euro by July 31, 2007, representing a 76.1 percent
increase. With such a huge rise, Porsche stock beat the Dax and even left the sec-
toral automobile index, CDAX-Automobile, in its wake. The Dax’s increase over the
same period was only 35.5%, while CDAX-Automobile recorded a 64.2% increase.
The considerable rise in the value of Porsche stock over the review year clearly
reflected investors’ support for Porsche’s stake in Volkswagen AG. During the
36
Porsche stock benefited both from excellent development
in core business and the increase in the stake in Volks-
wagen. Towards the end of the fiscal year, Porsche shares
reached an interim all-time high of 1,418 Euro.
Capital Market