The crisis on international financial markets came to a head over the course of the year, resulting in massive declines in share prices on the world’s stock markets. In the first three quarters, the DAX 30 lost 28 % of its value. The Dow Jones Euro STOXX 50, the index consisting of the Eurozone’s blue chips, slipped 29 %. October saw the collapse continue, with financial stocks intermittently in free fall. The DAX closed the month at 4,988 points, down 38 % on the level recorded as of December 31, 2007. Turbulence on the stock markets originated from the US subprime crisis, which has since affected the entire financial sector and caused banks to collapse. Numerous financial institutions avoided failure only thanks to state rescue measures. Nearly all of the large industrialized countries have introduced aid packages for banks, in order to strengthen trust in the financial system. So far, these steps have failed to brighten sentiment on stock markets significantly, since there is a general fear that the financial market’s crisis might be the beginning of a prolonged, worldwide recession.
RWE shares got off to a good start before being pulled into the downward spiral caused by the stock market turmoil. RWE common shares rose above the 100-euro mark (€ 100.64) for the first time ever on January 7. Share prices collapsed as the financial crisis came to a head. The total return (including the dividend) for the first nine months experienced a corresponding drop. It was –27 % for common shares and –36 % for preferred shares. By comparison, the Dow Jones STOXX Utilities — the European sector index — recorded a 24 % decline during the same period. On October 10, our common shares dropped to their low for the year so far of € 52.53, before closing the month up again, at € 64,79. The development of RWE’s share price was also affected by prices on commodity markets. Raw material prices worldwide rose considerably in the first half of the year, triggering an increase in quotations on European electricity exchanges. Share prices of utilities with a strong generation business like RWE reacted positively to this. But since July, in view of the crisis on financial markets and mounting fear of recession, commodity prices have declined considerably, accelerating the fall in RWE’s share prices.