German stock market sees biggest drop since 2008 crash

News that British voters had opted to leave the EU led to panic in Germany's largest stock index.

German stock market sees biggest drop since 2008 crash
Photo: DPA

It was the biggest shock to the Frankfurt-based DAX – a stock market index consisting of 30 major German companies – since 2008, the year of the global financial crisis.

In recent days markets became convinced Britain would vote to stay in the EU and had rallied as a result.

But after the results were confirmed before the opening of the trading floors, the financial index dropped 10 percent before rising slightly later in the morning, meaning an overall 8 percent drop.

“Everyone was in the wrong place,” one trader said. “Nobody was betting on Britain really leaving. Now there is a huge need to safeguard.”

Since the middle of the previous week the DAX had risen 9 percent on hopes that Britain would stay in the EU.

Banks were particularly hard hit. Deutsche Bank and Commerzbank both lost between 15 and 16 percent of their value. Allianz shares dropped by 13 percent.

But energy companies RWE and Eon which both have large investments in the UK were also affected.

“In the stock market you always need to think the unthinkable,” said market expert Daniel Saurenz, adding that traders had failed to do this in recent days.

German bond prices soar as investors seek Brexit safety

German government bond prices rose sharply on Friday as money poured in from investors seeking safety after Britain voted to leave the European Union.

This pushed the yield on the benchmark ten-year German government bond into negative territory for only the second time in its history, to -0.14 percent.

Yield differentials across the Eurozone, known as spreads, widened, with yields rising in the currency bloc's weaker southern economies.

The Greek government bond yield rose to 9.4 percent early Friday, traders said.

The Leave campaign won the referendum on Thursday with a vote of 52 percent to 48 percent, according to the BBC.

Voter turnout reached 72 percent with over 30 million people casting their ballots.

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Foreigners officially resident in Europe not covered by new EES passport rules, EU Commission confirms

The European Commission has clarified that foreigners officially resident in the EU are not covered by EES - the far-reaching changes to passport control rules due to come into effect next year.

Foreigners officially resident in Europe not covered by new EES passport rules, EU Commission confirms

The EU’s new entry and exit system (EES) is due to come into effect in May 2023, followed by the new ETIAS system in November, and between them they will have a major effect on travel in and out of the EU and Schengen zone.

EES means automated passport scans at EU external borders, which will increase security and tighten up controls of the 90-day rule – you can find a full explanation of how they work HERE.

But the system is aimed at tourists and those making short visits to the EU / Schengen area – not non-EU citizens who live in an EU country or second-home owners with visas, and there had been questions around how those groups would use the new system.

Now the European Commission has confirmed that EES does not apply for non-EU citizens who are living in those countries taking part, telling us: “Non-EU nationals holders of residence permits are not in the scope of the Entry/Exit System and ETIAS. More about exceptions can be found on the website.

“When crossing the borders, holders of EU residence permits should be able to present to the border authorities their valid travel documents and residence permits.”

What this means in practice is that foreign nationals living in France, Germany or other EU /Schengen states cannot use the new automated passport gates that will be introduced with EES in May 2023.

The reason for this is that the automated passport gates only give the option to show a passport – it is not possible to also show a residency permit or a visa.

The automated system also counts how long people have stayed in the Schengen area, and whether they have exceeded their 90 day limit – since residents are naturally exempt from the 90-day rule, they need to avoid the 90-day ‘clock’ beginning when they enter the EU.

You can listen to the team at The Local discuss the pklanned new EU passport checks in the latest episode of our Talking France podcast. You can play the link below or download it here.

READ ALSO How does the EU 90-day rule work?

A Commission spokesman said: “EES is an automated IT system for registering non-EU nationals travelling for a short stay, each time they cross the external borders of European countries using the system (exemptions apply, see FAQ section).

“This concerns travellers who require a short-stay visa and those who do not need a visa. Refusals of entry are also recorded in the system.

“Non-EU citizens residing in the EU are not in the scope of the EES and will not be subject to pre-enrollment of data in the EES via self-service systems. The use of automation remains under the responsibility of the Member States and its availability in border crossing points is not mandatory.”