By Hunter Bosson

On March 16th, the DAX, a German blue chip stock market index, passed 12,000 for the first time. 2015 has been a good year for the DAX; it has risen by 20% since early January, compared with a 2.4% rise in the S&P 500.

The rise can partly be attributed to the recent success of some of Germany’s business titans, such as Volkswagen, BMW, and Daimler, all of which are part of the DAX index. The upward trend has also benefited tremendously from the ECB’s aggressive quantitative easing policies, which continue to buoy stock markets throughout the Euro zone. QE, along with a strengthening dollar, have also put downward pressure on the Euro, emboldening international investors attracted to German firms with large revenues from abroad. However, few Germans will see the capital gains accrued over the last few months. Only 13% of Germans hold stocks, compared to 49% of Americans. Lay Germans have traditionally avoided stocks for their high risk, preferences reinforced by the Great Recession. There are already calls of an imminent DAX crash, such as by the Société Générale, a French bank. While the DAX is unlikely to crash while the ECB continues its expansionary policies, there is little indication that a higher DAX will translate into real economic growth. While profits may continue to rise with currency depreciation, this is no guarantee that firms will increase hiring or production. Unfortunately for Germany, economies depend on more than strong stock markets.