SAFE publishes a new index that provides insights into the mood of top managers of listed companies
The Leibniz Institute for Financial Market Research SAFE presents a new monthly market barometer: the SAFE Manager Sentiment Index. The index value shows how optimistic or pessimistic the board members and financial managers of companies listed in the stock market indices of the DAX family express themselves in current annual and quarterly reports as well as analyst conferences.
The index was created by Alexander HillertProfessor of Finance and Data Science at SAFE. With his team and modern text analysis methods, he collects and evaluates positive and negative statements in the companies’ reports and conference transcripts. The results provide insight into the current willingness of management to invest and also allow conclusions to be drawn about medium and long-term trends in stock returns.
Managers are “cautiously pessimistic” at the beginning of 2025
“Alexander Hillert and his team have developed the SAFE index for manager sentiment, a valuable instrument that complements previous survey-based indices,” says Florian HeiderScientific Director of SAFE. “By taking into account statements directly from the executive suites of large, internationally operating companies, the index creates a particularly accurate picture of the economic situation.”
In January, the index value was slightly negative, which means that the negative mood among company management is currently somewhat outweighing the negative sentiment. Heider comments: “On average, company executives are cautiously pessimistic, but are more optimistic than one might expect given the overall economic situation in Germany. This underlines the export orientation of German DAX companies.”
Scientifically based methodology
The index value is based on the ratio between negative words such as “decline” and “severe” and positive words such as “increase” and “profitable” in texts from the last three months. The words are classified as positive or negative according to scientifically established word lists. The text analysis methodology thus filters out the current “net optimism” from the current manager statements.
The concept of the SAFE index for manager sentiment is based on a study published in the renowned 2019 Journal of Financial Economics was published (Jiang et al. 2019). The study’s results show that optimistic statements in U.S. corporate reports and analyst conferences are associated with higher investments in the short term, but lower stock returns and profits in the long term.
The SAFE index for manager sentiment helps to better understand the current climate in listed companies in Germany. With its innovative methodological approach, it complements existing indices and offers companies, investors and political decision-makers a tool to better understand financial market developments.
Detailed information, graphics and a white paper on the methodology are available on the SAFE-Website ready.
Release dates
The other planned release dates in the first half of 2025 are:
- Tuesday, February 11th
- Tuesday March 11th
- Wednesday April 9th
- Tuesday, May 13th
- Wednesday, June 11th