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FRANKFURT : A German car maker is ignoring the equity market exodus: Volkswagen shares have set record highs while almost all other stocks are slammed by the financial crisis.
"There is no rational explanation," said Juergen Pieper, an analyst with the Metzler Bank amid heavy trading in the auto giant's shares.
Merck Finck counterpart Robert Heberger agreed, saying in reference to the group's share price: "There is no longer any relation to its real value."
Last week, as the credit crisis spilled financial blood on stock markets worldwide, shares in the biggest European carmaker took off in Frankfurt, hitting an intraday record high on Tuesday of 452 euros (605 dollars).
Though the shares later dived lower, on Friday, while the German Dax index of leading shares plunged by 7.01 percent, VW gained an incredible 15.2 percent to close at a record 342 euros.
VW shares gained another 3.23 percent amid general market euphoria on Monday to a new record 353.06 euros.
As a result, VW has passed Japanese rival Toyota as the biggest car maker in the world in terms of market capitalisation, at more than 90 billion euros, compared with around 80 billion for the Asian giant.
What is all the more surprising is that the auto sector is one of the most exposed to turmoil from the financial crisis.
VW has done better than many competitors, with sales tipped to set new records this year, "but when we are in a recession, it is going to suffer as well," Heberger noted.
Pieper added: "VW's true share value is around half" the present level.
"They are also going to cut production and the boss has already warned that 2009 will be difficult," he said.
Explanations for the stock's health thus lies elsewhere.
First of all, VW is in the process of being taken over by Porsche, the maker of luxury sports cars like the 911.
Porsche currently owns more than 35 percent of the shares in its much bigger German counterpart, and has indicated it will reach 50 percent by the end of November.
But Porsche insists it is not presently buying VW shares on the market.
A persistent rumour has it that someone is doing the trading on Porsche's behalf.
For several months, Porsche has held options to buy VW shares that it obtained in deals with banks.
As the deadline for Porsche's takeover approaches, those banks must make sure they own the shares in question.
Brokers have said banks probably waited until the last minute in a bet that VW shares would fall because of the financial crisis and might be scrambling now to cover their positions.
Another hypothesis is that speculative investment funds may have targeted VW shares with the practice of short selling, in which they borrow shares that are immediately sold in expectation of being able to repurchase them later at a cheaper price before they must be returned to the original owner.
If that were the case, funds could also be buying heavily to make sure they can return the VW stock without suffering even heavier losses.
"People must unwind short positions because they are losing money," Baader Bank strategist Robert Halver told AFP.
But in the end, even market specialists say that "no one knows who is holding the positions, who the speculative funds might be, who is buying or selling for Porsche," in the words of BHF-Bank analyst Albrecht Denninghoff.
"We do not know how many people are on board the ship.
"There is no transparency in the markets. At that point, anything is possible."
Halver goes even further, saying that even funds caught short trying to profit from short selling would not fully explain VW's soaring share price.
"It is just not possible," he said.
"BaFin should open an investigation," Halver added in reference to Germany's financial market regulator.
A spokeswoman for the market watchdog told AFP it is "examining the data.
"It is not a formal investigation," she added.
- AFP /ls
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