One of the most prominent German stock exchange-trade funds in the U.S. has a very high Fund Sentiment Score on Fintel’s dashboard. The BlackRock Institutional Trust Company-iShares MSCI Germany ETF (US: EWG) has a Fund Sentiment score of 96.18. That is the 184th highest score out of 36,627 names tracked by the website.

The score is based on two main metrics: “the change in the number of disclosed owners over the prior quarter, and the change in portfolio allocation of existing owners over the prior quarter.”

The NYSE ARCA-traded ETF is down 2.2% in the last month, closing on Wednesday at $28.36 a share. It carries a 0.5% expense ratio while the yield, at the current share price, is 2.72%.

German Macroeconomic Signals Look Good 

Driven by the German services sector, the country’s economy may be accelerating, recent data indicates. The country is the fourth largest economy in the world after the United States, China and Japan, and the largest economy in Europe. It is the third largest export nation globally: With 70%, the service sector contributes the largest part to the country's GDP, according to consultancy KPMG.

On May 23, the country’s Flash Composite Purchasing Managers' Index for May came in at 54.3, the gauge’s best level in more than 12 months, according to S&P Global. Analysts, on average, had estimated that the PMI would be 53.5. That’s the fourth month in a row that the index has come in above 50, which is the dividing point between expansion and contraction.

Germany’s services PMI was a very robust 57.8 in May, representing its best reading in almost two years.   

On the other hand, the manufacturing PMI dropped to its lowest level in three years, to 42.9 for the month.  

On April 26, Germany increased its 2023 GDP growth forecast to 0.4% from its prior outlook of 0.2%. The country's Economy minister, Robert Hbeck, stated that “a gradual recovery is underway.”

In the first quarter, the German economy was flat versus the previous quarter, on a seasonally adjusted basis. 

Meanwhile, a recent initiative by the German government could help the country’s struggling manufacturing sector. Berlin revealed on May 22 that it’s considering capping the electricity costs of “energy-intensive industries… at 6 cents per kilowatt hour.”

In 2022, the government limited electric prices for both consumers and companies, but the new initiative would further reduce electricity costs for some businesses.  

Familiar Names Among Top Holdings

The ETF’s top four components are SAP (US:SAP), Siemens (US:SIEGY), Allianz (DE:ALV), and Deutsche Telekom (US:DTEGY). SAP is a global software company that specializes in providing enterprise resource planning applications to businesses. Siemens is a global infrastructure conglomerate, while Allianz is Europe’s largest insurance company. Deutsche Telekom is one of the largest telecom companies in Europe. 

The ETF’s eighth-and ninth-largest holdings are more focused on Germany. Deutsche Post (US:DPSGY) specializes in delivering mail and packages in the country, while BASF (US:BASFY) is Germany’s largest chemical company, and one of the world's biggest. 

Bearish Options Sentiment

Fintel’s data on options analysis for EWG stock shows sentiment has turned bearish. The put/call ratio sits at 2.14, with a ratio above 1 indicating bearish sentiment in the stock. 

This ratio is calculated over time by dividing all disclosed call options in the market by put option demand over time to determine how sentiment is changing.

The chart below illustrates how this ratio has behaved over the last year against share price moments.

Also worth noting, when we have a glance at forward-looking put/calls (chart/table below), the nearer time put/call ratio is high but out in the distance, beyond July 2023, it’s much lower. An investor could read that as a choppy short-term outlook for EWG stock but turning more positive for the long-term outlook.

That action follows several notably institutional buys In the first quarter. Ameriprise Financial acquired 1.28 million shares of EWG stock, while Wells Fargo came in with a purchase of nearly 108,000 shares in the period. 

Meanwhile, Bank of America bought a call option for 378,638 shares in Q1 and HSBC Holdings snapped up 22,633 shares during the period.