Tiny Note: German Reform Hammer

Research evidence excerpt

Tiny Note: German Reform Hammer

Deutsche Bank

Research

Strategy Date

Tiny Note 2 July 2026

German Reform Hammer

Maximilian Uleer

This morning the German government agreed on a wide set of new reforms that Strategist

come on top of the large set of fundamental reforms that already got announced +49-69-910-41355

and partially passed in Q2. The hammer of reforms is in full swing, but it will take

patience to see it hit markets. Global investors have barely taken notice. Carolin Raab, CFA

Strategist

Instead, German index ETFs saw net outflows in Q2. High energy prices, weak +49-69-910-43958

economic growth, below target government spending and a lack of structural

Francesca Mazzali

reforms got investors worried. Instead, investor attention focused on the Iran Strategist

conflict, IPOs and AI. Next to a challenging macro environment, upcoming +49-69-910-47636

regional elections in Germany and high frustration within the population put

pressure on the government. The government’s approval ratings have dropped

to extremely low levels.

The mix of fiscal impulse and previous reforms not yet kicking in, pressure from

geopolitics and pressure from the voter base seem to have created the right

environment for significant and much needed change.

The number of reforms is too extensive to fit into our Tiny Note format and at the

current speed of reform announcements it is hard even for strategists being

based in Germany to stay on top. But with energy prices being back to pre-Iran

war levels, investor attention moving away from the Iran war and proof of the

much-needed reforms actually happening, we reiterate our call to be overweight

German equities. We see the biggest upside in German Mid and Small Caps,