Traders in front of the DAX board at the stock exchange in Frankfurt. Photo: Reuters

Leading German business newspaper Handelsblatt writes Friday that the main exchange of Europe’s biggest economy is about to blow up.

The article cites a recent trend of the country’s biggest companies, such as healthcare firm Fresenius, engaging in risky acquisition deals driven by low interest rates. The ratio of goodwill to hard assets, the article argues, has gotten out of hand, inflating the balance sheet of companies and their stock valuations.

But how out of hand is that ratio? In fact, DAX goodwill to assets stands at just 4%, while the for S&P companies it is twice that. It is worth noting the trend, but to argue that DAX is a bubble about to burst is more than a bit alarmist.

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