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This week…

• Reviewing the DAX index• A look back at several

previous Dax calls• Germany's Dax

constituents

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General Advice & Risk Warning

Please note that any advice given by Invast staff is deemed to be GENERAL advice, as the information or advice given

does not take into account your particular objectives, financial situation or needs.

Therefore at all times you should consider the appropriateness of the advice before you act further.

CFDs and Forex are leveraged products and carry a high level of risk and are not suitable for everyone. You can lose

more than your initial deposit so you should ensure CFD and Forex trading meets your investment objectives. We

recommend you seek independent advice. Strategies and charts used in this presentation are for example only. You are

reminded that past performance is not indicative of future performance.

Invast Financial Services is regulated by ASIC. It's important for you to read and consider the relevant Product

Disclosure Statement and Financial Services Guide which contains details of our fees and charges before you decide

whether or not to acquire any financial products. These documents are available at www.invast.com.au

Invast Financial Services Pty Ltd ABN: 48 162 400 035. Australian Financial Services Licence No.438 283

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This week we look at the following topics:

• Reviewing the DAX index

• A look back at several previous Dax calls

• Germany's Dax constituents

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Dear Readers,

Our analysis this year has so far touched on the 2015broader Outlook Guide and in February we focused onAustralian listed companies. The new push this year is onindividual stocks, powered by Invast’s new DMA platform.The benefit of this platform is that it provides direct marketaccess into several global exchanges.

Our focus in March will be to analyse these major exchanges,as represented by key indices. Indices are important tounderstand even if you trade underlying stocks. All of theindices that we touch on in March are traded throughInvast’s MT4 platform, which remains a powerful trading tooland part of the overall Invast toolbox for traders.

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In April we plan to focus on individual stocks across these indices and we will groupthese stocks into various trading baskets across four individual weeks. But before thatcan occur, we need to study and analyse to see where each index is currently trending.

Our analysis will be broken up as follows:

Week commencing 2 March 2015: Outlook for the German DAX30 Week commencing 19 March 2015: Outlook for the UK FTSE100 Week commencing 16 March 2015: Outlook for the US S&P500 Week commencing 23 March 2015: Outlook for the Australian ASX200 Week commencing 30 March 2015: Outlook for the Hong Kong HSI50

Week commencing 2 March 2015: Outlook for the German DAX30

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We start the month by looking at the DAX, perhaps one of the indices which we havebeen very bullish on. Our conviction has been reiterated in our Invast Insights reportsand blog posts on the Invast website. We didn’t just wake up one day and think thatthe DAX is a good trading opportunity. Our thoughts have been deep and based onextensive analysis, underpinned by a European Central Bank which is determined toavoid deflation and contagion for member states.

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Chart: GER30 daily price chart as quoted on Invast MT4 platform

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Here is a brief chronology, spanning the last six months, of what Invast has publishedon the DAX30 index:

- August 2014: “…German multinational companies – most of which make up the top10 stocks on the DAX – would love to see two things. The first is a weaker Europe whichwill help increase the amount of translated earnings back home and also make themmore competitive against other global counterparts. The Euro will continue to declineagainst the US dollar, it is still too high. It won’t happen overnight, but it will happen asthe US dollar strengthens.

The second major stimulus is cheap money – when companies can borrow at 1-2% itbecomes easier to go out and undertake corporate deals on businesses yielding 5-10%which means even paying a 20x price to earnings ratio for an acquisition target isaccretive if completely funded by debt, excluding any corporate synergy benefits.

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Watch for more M&A activity which will add stimulus to market valuations. German 10year treasury yields are now at 1%, down 80 basis points over the past year. For thisreason, I remain a big believer in the scope for the European markets and the DAX inparticular, to become solid markets in the next year or two. Germany won the worldcup soccer finals this year and the nation is still the fourth largest economy in theworld, behind Japan, China and the USA respectively, when measured by nominalGDP...” Source here from Invast website.

- September 2014: “…It might be tempting to take such a quick profit on the DAX but Ireally do believe the moves we have recently seen are part of a major growth period ofEurope and global capital will start to readjust allocation into these markets as thefinancial numbers start to bare fruits from cheap money flooding into the system…”Source here from Invast website.

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- October 2014: “…Today I see the DAX around 400 points below the August level,currently at around 8900 as of the time of writing. The huge trading range is areflection of uncertainty in the market. The most important factor for me is the fall inthe Euro. This is a huge boost for Germany multinational businesses which make up alarge portion of the DAX.

I’ll be watching the DAX very closely over the next week or so to see where it stabilises.It should find some strong support here, if not then there could be another largedownward leg towards 8500. I’m not a technical analyst and so my exact levels are notprecise, merely a guide for short term price action. What I am fairly confident of is therecord low interest rates in Europe and the falling in the EUR/USD will eventuallyremain huge growth drivers for German multinational businesses that dominate theDAX index and this needs to be taken into account for anybody trading the DAX index…”Source here from Invast website.

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- December 2014: “One of my key convictions has been around the resilience of Europeand the fact that I believe Draghi will act to reassert the ECB’s authority and credibilitysometime in the first half of 2015. When that occurs, European stocks including majorindices like that DAX will have scope for further upside.

These are the types of share price moves I watch for. These are the signs that confirmto me European companies are now ready to start drawing up on record low debt andmaking significant company changing deals. These are the types of deals that movestock markets. There are significant downgrades going on in European companies atthe moment but stock market traders look forward, not backwards. The stock marketusually front-runs the economy by around 6-12 months and so 2015 will be aboutEurope’s future into the later part of this decade, not its problems in the first half.Source here from Invast website.

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So what’s the point of reiterating all of these notes? Many traders will by now knowthat the DAX has rallied around 31.5% from its October low – that’s in a period ofaround 6 months. Throughout this period, we were holding on to the view that theDAX is fundamentally a major beneficiary of what the ECB plans to do. Many at thetime were doubting the willingness and capacity of the ECB to act. But not us. Westuck to our guns and put our view on the table despite the technical analysissuggesting negative patterns and financial market community doubts on more ECBstimulus.

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The lesson here is that fundamentals are important. It is essential to maintain yourground in markets and focus on the big picture. The DAX rally has been part of a bigpicture story which we have been building now for a while.

In fact it’s not just the last six months, we firststarted publishing our bullish DAX news inOctober 2013. You can read that report here.The DAX tends to be our main focus forEuropean shares because of the size and highquality of index constituents on offer.

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Bottom line: Our conviction on the DAX has not yet changed, we remain positive.There might be a short term pullback but we haven’t yet seen merger and acquisitioneuphoria that would prompt us to call a top in the index. Many might see the DAX’srecent run and think that gains have been priced in. We still think that the merger andacquisition environment is yet to completely respond to the ECB’s action. The DAX isstill our preferred European index exposure. The ECB’s actions come withrepercussions and certain issues like Greece are still not yet solved. These are all minorconsiderations though for the top 10 German multinational businesses.

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DAX Index Constituents

If you’re trading the DAX, you should know which companies make up the majority ofthe index and how these companies benefit from the ECB stimulus action. Almost all ofthe top 10 stocks on the index benefit immensely from a lower EURUSD relationshipand cheap debt. This is the perfect mix for large, multinational businesses like thoselisted below. The following is a breakdown of the MSCI Germany index, which isn’texactly the same as the DAX, but close enough for illustration purposes.

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Top 10 MSCI German index constituents

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Next week our focus will be on the FTSE. Our view is not as favourable as the DAXbecause the UK economy still has some pain to work through. The index compositionof these UK names is different to that of the DAX. We will go through these differencesand how monetary policy means different results for each respective index.

Also, make sure to register early for our March webinar, with details below. Link will beon the Invast website under Resources > Online events.

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Outlook on major global indices – a correction coming?

Invast Insights chief editor and contributing author Peter Esho will summarise hisoutlook on the major global indices in March. Esho will document his findings basedon the performance of key stocks across these indices and where he believes the bigopportunities lie throughout this year. His presentation will focus on the following 5themes:

Outlook on the German DAX30Outlook on the UK FTSE100Outlook on the US S&P500Outlook on the Australian ASX200Outlook on the Hong Kong HSI50

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Esho is a regular contributor on CNBC, Bloomberg and host of ‘Your Money YourCall’. His webinar will cover both the fundamental and technical outlook on thesekey themes and a basic introduction to Invast’s new DMA CFD product offeringwhich complements MT4 and other services. This webinar is expected to fill fast.Q&A will be open straight after the presentation. Register now by visitingwww.invast.com.au/webinars.

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Go to www.invast.com.au/insights to get a complimentary 4 week trial and receive the latest insights as they are published to our live clients.

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DisclaimerPlease note that you are receiving this report complimentary from Invast Financial Services Pty Ltd(AFSL 438 283). Invast staff members may from time to time purchase securities which areincluded in this or future reports. The authors of this report may or may not be holding a positionin the securities mentioned. Please note that the information contained in this report and Invast'swebsite is of a general nature only, and does not take into account your personal circumstances,financial situation or needs. You are strongly recommended to seek professional advice beforeopening an account with us.

General Disclaimer: This newsletter contains confidential information and is intended only for theperson who downloaded it. You should not disseminate, distribute or copy this newsletter. Invastdoes not accept liability for any errors or omissions in the contents of this newsletter which ariseas a result of downloading this newsletter. This newsletter is provided for informational purposesand should not be construed as a solicitation or offer to buy or sell any financial product. InvastFinancial Services Pty Ltd is regulated by ASIC (AFSL 438 283 | ABN 48 162 400 035).

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Risk Warning: It's important for you to read and consider the relevant Product DisclosureStatement, and any other relevant Invast Financial Services Pty Ltd documents before you decidewhether or not to acquire any financial products listed in this email. Our Financial Services Guidecontains details of our fees and charges. All these documents are available here on our website, oryou can call us on +612 8036 7555. CFDs and Foreign Exchange are leveraged products and carry ahigh level of risk and you can lose more than your initial deposit so you should ensure CFD andForeign Exchange trading meets your personal circumstances.

General Advice Warning: Being general advice, this newsletter does not take account of yourobjectives, financial situation or needs. Before acting on this general advice you should thereforeconsider the appropriateness of the advice having regard to your situation. We recommend youobtain financial, legal and taxation advice before making any financial investment decision.

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