The Deutsche Bank share may have bottomed out after the price declines of the past few months. With bonus certificates with a cap, investors can even generate very high returns when the price has almost halved.
The Deutsche Bank share was able to rise again significantly from its 12-month low of EUR 7.53 on July 15, 2022. Like most financial stocks, Deutsche Bank stock reacted positively to the interest rate hike, gaining as much as €9.18 by August 17, 2022. In the course of the general market weakness, the share fell back to its current level of EUR 8.41.
Due to the increased earnings in investment banking, experts with price targets of up to EUR 20.10 (Goldman Sachs) reiterated their buy or hold recommendations for Deutsche Bank shares.
The investment idea
At the still reduced level, now could be a good time to invest in Deutsche Bank shares, which are classified as slightly undervalued. If you want to significantly reduce the risk of buying shares directly and still want to achieve returns above the inflation rate, you could consider investing in a bonus certificate with a cap.
Apart from dividend payments, private investors can only achieve positive returns when buying a share directly if the price rises. Compared to direct share purchases, bonus certificates with and without a cap offer investors opportunities for annual returns in the double-digit percentage range not only when the share price rises, but also when prices stagnate or fall.
The way it works
If the Deutsche Bank share never touches or falls below the barrier of EUR 4.50 by the valuation date of the certificate, then the bonus certificate will be repaid on September 22, 2023 with the bonus level of EUR 10.50.
The key data
The HSBC bonus certificate with a cap (ISIN: DE000HG44WF8) on Deutsche Bank shares has a bonus level and a cap of EUR 10.50. The cap defines the maximum repayment amount of the certificate. The barrier activated until the valuation date, September 15, 2023, is EUR 4.50. At the Deutsche Bank share price of EUR 8.41, investors could buy the certificate for EUR 8.88.
The chance
Since the certificate is currently available for EUR 8.88, it enables a gross return of 18.24 percent (=17 percent per year) in 13 months if the share price has never fallen by 46.49 percent to EUR 4.50 by the valuation date or falls below.
The Risks
If the Deutsche Bank share loses almost half of its value by the valuation date and touches the barrier at EUR 4.50 and the share is listed below the cap on the valuation date, the certificate is redeemed at the closing price of the share determined on the valuation date. If this price is determined below EUR 8.88, then the certificate investment will cause a loss.
This article does not constitute a recommendation to buy or sell Deutsche Bank shares or investment products based on Deutsche Bank shares. No liability is assumed for the correctness of the data.
