Burgeoning momentum overdrawn? Concerns are raised about profit-taking as Germany's stock market faces overvaluation.

According to the Wisdom Financial APP, the valuation of the German stock market has reached a historical high. Some investors believe that the current market needs substantial growth in company profits to support the record high. After the government led by German Chancellor Friedrich Merz promised to invest billions of euros in infrastructure and defense sectors, the Frankfurt DAX index has risen by 21% so far this year. The benchmark index's expected P/E ratio is close to 16 times, not only higher than the 13 times average over the past decade, but also the highest premium relative to European peers since 2009.