LIVE MARKETS-Germany's 500 bln euro fund - how to spend it?

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GERMANY'S 500-BLN EURO FUND - HOW TO SPEND IT?

The general euphoria over Germany's landmark fiscal reform appears to have evaporated and with markets now looking more vulnerable to profit taking, investors are likely going to focus on where and when exactly the money is going to be spent.

Although spending details of a planned 500 billion-euro ($542 billion) infrastructure fund are not yet clear, Citi is out with a note looking at possible sector impacts.

"Our first assessment is that the climate allocation is most likely geared to building efficiency, power grid, EV charging, and hydrogen," says Citi, noting how the "halo effect" from higher spending should boost industrial production in 2026.

This should lead to low-mid single digit EPS upgrades at material handling firm KION KGX.DE for example, and support expectations for engineering group Siemens SIEGn.DE, it says.

Grid investment could support Siemens Energy ENR1n.DE, and hydrogen projects be helpful for TK Nucera NCH2.DE.

In rail, Citi thinks any benefit to rolling stock (Alstom ALSO.PA and Siemens) will be back-end loaded, adding it is not clear how much of the desired 150 billion is wholly incremental.

(Danilo Masoni)

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