Capital market environment

Although the capital market environment during the 2023/24 financial year continued to be characterized by economic and political uncertainty, equity markets performed very well over this period. Despite a stagnating economy in Germany and only modest growth across Europe, as well as geopolitical conflicts, including the ongoing war in Ukraine and Hamas’s terrorist attack on Israel, many leading equity indices posted new record highs by the end of 2023. The year-end rally particularly reflected the fact that inflation receded steadily over the course of 2023, in both the Eurozone and the USA, and equity markets were discounting a new cycle of interest-rate cuts.

The positive trend on stock markets continued worldwide in the first nine months of 2024 and led to new record highs for most leading indices during the first two quarters of the year. Initially, share prices were driven higher mainly by the further decline in inflation. This fueled market participants’ expectations of interest-rate cuts, which were then bolstered by actual measures from central banks from the mid-year onwards. The European Central Bank (ECB) lowered its benchmark interest rate by 0.25 percent in both June and September, and the US Federal Reserve surprised with a large interest-rate cut of 0.5 percent in September. At the same time, however, robust US economic data and good corporate earnings – particularly from the technology sector – gave shares a further boost, which then drove the entire market up. Market participants’ optimism was fueled especially by high hopes for the future of AI. Even though stock markets then recorded sharp setbacks at the beginning of August, mainly due to a strong yen and the unwinding of yen carry trades, anticipated and actually implemented interest rate cuts by central banks around the world quickly led to a strong recovery on capital markets. As a consequence, the most important equity market barometers posted new historic highs by the end of the third quarter.

The German benchmark index, the DAX, started BRAIN Biotech’s financial year at 15,386.58 points and reached its high for the first nine months of the year at 19,491.93 points on 27 September 2024. As of the end of BRAIN Biotech’s financial year, the DAX stood at 19,324.93 points, reflecting an increase of 26 %. The SDAX, which is the more important benchmark index for BRAIN Biotech, also performed well over the same period, rising by 10 %, although it significantly underperformed its big brother, the DAX. With a gain of around 24 %, the specialty chemicals sector index only slightly underperformed the DAX, while the NASDAQ Biotech Index rose less strongly by around 14 %. The BRAIN Biotech share, which was down by 50 % over the reporting period, thereby significantly underperformed both the DAX and SDAX benchmark indices as well as the chemical sector covered by the SP500 Specialty Chemicals and the NASDAQ Biotech Index.