Market bets on massive Merz spending and potential reforms will activate long-term growth momentum.

Analysts point out that the German capital market remains calm. The German DAX index, which surged 30% in the past year, continues to hover near its historical highs - indicating that the market is betting on Merkel's large-scale spending and potential reforms to activate long-term growth momentum. Germany plans to increase core defense spending to 3.5% of GDP and unleash massive public investment. However, the real test will come in 2027 at the fiscal tipping point: whether Berlin can achieve rebalancing without compromising its fiscal discipline genes, which will determine investor confidence.