• Stress factors on the world’s stock markets are increasing: is a crash now imminent? –

In a very unfavourable environment, Porsche wants to carry out its IPO on 29 September 2022. State funds from Qatar and Norway want to participate. Not all banks will get material. The broker Zerich Securities offers clients to participate in Porsche’s IPO via the portal Mind-Money. This can be done via the link https://mind-money/eu/de/ipo-porsche . Porsche’s IPO, which has been planned for a long time, is courageous and takes place in a very unfavourable environment. After the FED raised interest rates by 0.75 basis points, almost all markets in all asset classes collapsed, causing losses in the trillions of US dollars. However, this also allows for favourable pricing on Porsche’s IPO, which could become a good entry opportunity for long-term investors.

Andreas Männicke gives his assessments of the monetary and geopolitical dangers, but also of the new opportunities, in his stock market letter EAST STOCK TRENDS (www.eaststock.de) and in his new EastStockTV video, episode 199 at www.YouTube.com, 

Monetary and geopolitical dangers increase

However, investors are increasingly unsettled by monetary policy and the geopolitical dangers in Ukraine, which could even lead to a third world war. First, investors had to cope with another interest rate move of 0.75 basis points due to inflation rising too high above 8 per cent, and then almost simultaneously the partial mobilisation in Russia, which led to a wave of selling on world stock markets and commodity markets.  The Ukraine war may escalate further. The sanctions, which have had little effect so far, are hurting their own people more than Russia’s, which is also very capable of suffering and crisis-tested. However, one may be curious to see how the Russian people will now react to the partial mobilisation. Investors are increasingly unsettled. The world’s stock markets reacted with sharp price drops.

World stock markets slump after the FED’s interest rate hike, but so do commodity prices

The Dax fell by 1.97 per cent to 12,228 index points on Friday.  The DAX thus reached a new low for the year, losing 23.3 per cent since the beginning of the year. At the same time, the DAX is now at about the same level as 3 years ago. So, easy come, easy go for those who did not sell in time and went into liquidity as recommended by me in the stock exchange letter EAST STOCK TRENDS (www.eaststock.de). At 12,400 index points, the DAX has broken through an important support, so prices could fall much lower in the coming weeks.

The American S&P index lost 1.72 percent to 3693 index points, which means a price loss of 23 percent since the beginning of the year as well. But not only did the bond and stock markets collapse across the board, but also the commodity markets. The price of crude oil, for example, fell by as much as 5.57 per cent to USD 85.36/barrel on Friday, which is good for inflation.   But all precious and industrial metal prices also fell sharply after the FED rate hike, continuing the bear market. But most cryptocurrencies also lost significant value. Bitcoin, for example, fell back below 20,000 BTC/EUR and Ethereum below 1400 ETH/EUR.

Even gold-silver were not in demand and not a “safe haven”.  The gold price fell by 1.68 per cent to a new low for the year of 1643 USD/ounce and the silver price even fell by 3.78 per cent to 18.89 USD/ounce. At 1670 USD/ounce, the gold price thus also broke an important support line, so that the gold price can now also fall into a hole.

In such difficult market phases it is better to stay in liquidity or to go short on the futures markets, which most private investors do not do. Staying invested here is now very dangerous because several risk factors add up. But that was also foreseeable. September has always been one of the worst stock market months of the year. October has become known as a crash month, but statistically it is better than September.

Rising interest rates also cause hardship for the state

The 2-year US bonds rose to a new annual high of 4.2 per cent in terms of yield, which means a new high. Consequently, the T-bond future plummeted by 0.75 basis points to below 130 USD after the FED’s interest rate hike, which also means a new low. However, the real estate markets worldwide are now also at risk, where prices will still collapse. If real estate becomes unsaleable because of the now enormously rising mortgage rates, there could be another big banking and financial crisis like in 2008. But the high yields on government bonds also mean that the government now has to take on much more debt. The US economy is stagnating and so is the European economy. China has only low growth.  With a debt of 30 trillion US dollars, the US payment burden increases by 600 billion US dollars at 2 percentage points.

It may not be possible to finance the large-scale spending on climate change and infrastructure in the US at all, as Joe Biden had imagined with tax increases. In the event of a prolonged recession, tax revenues will also collapse. This is not likely to please Joe Biden, who is now in a low mood anyway and could lose the important midterm elections in November. That could then be Donald Trump’s comeback.

German government puts Germany in trouble

The euro fell a further 1.5 percent to a new low for the year of 0.97 EUR/USD around Friday on the back of a sharp rise in US interest rates. This increases imported inflation in Europe for products that are invoiced in US dollars. Liquefied petroleum gas from the USA is now also becoming more expensive for Europe. The biggest burden in the EU, however, is the enormous increase in gas and electricity prices almost tenfold, which could even lead to a wave of insolvencies in autumn/winter.  So far, the German government knows of no means to get a grip on electricity and gas prices. Whether a planned price cap for Russian oil and gas is feasible and effective is doubtful for many reasons.

Putin clearly has the upper hand here. The sanctions will come back with double force as a boomerang, which is foreseeable. The German government is thus endangering the continued existence of Germany as an industrial location. Now Habeck/Bearbock even want to rebel not only against Russia, but also against China. The consequences of such a destructive policy will lead to more unemployment and dissatisfaction among the population. Moreover, this leads more and more to a division of the world into G7 against BRICS & Co, whereby many Arab and South American countries feel more connected to BRICS.

A “hot autumn” and a cold winter loom on the horizon

There is a threat of a “hot autumn” on the roads and a cold winter for the population in Germany. Russia is no longer supplying gas to Europe. Although the storage facilities are now 90 percent full, they will only last for 2 to 3 months. An energy crisis caused by the sanctions could spread and, in the worst case, even lead to a blackout in winter, for which the EU is in no way prepared. In the event of a blackout, nothing would work. There would then be total chaos. So there is a lot to be said for a hot autumn, which could also put further pressure on the stock markets.

Slide to the Right in Italy Endangers the EU and the Euro

But the elections in Italy on 25 September could also destabilise the EU with a slide to the right. According to initial projections, the alliance around the radical right-wing Fratelli d’Italia has prevailed in the parliamentary elections in Italy. The alliance of the Fratelli d’Italia party led by Giorgia Meloni, the right-wing populist Lega of former Interior Minister Matteo Salvini and the conservative Forza Italia of former Prime Minister Silvio Berlusconi is in the lead.

Meloni is the “Le Pen of Italy” with very right-wing nationalist and anti-EU election speeches. Meloni could now become the first female prime minister in Italy. Meloni and Berlusconi want to build a better relationship with Russia to avoid the big energy crisis in Italy. Berlusconi also gets along well with Putin. This could split the EU more in the future and even endanger the euro.

Ukraine war could escalate further

So the problems are adding up, which is already bringing global stock markets to their knees.  But it could get even worse. In a worst-case scenario, there is even the threat of a crash in October if the problems not only persist but even escalate, which could be the case at any time in the Ukraine war. Peace negotiations and a ceasefire are now fundamentally necessary and the German government should rather focus on negotiations instead of supplying more and more heavy weapons. In this way, Germany is becoming more and more a party to the war, but so are the USA and NATO, which is very dangerous and threatening.

Putin ordered a partial mobilisation on 21 September, which means that 300,000 reservists are now being trained and gradually sent to the front in Ukraine. It is clear that this will not only go down well with those affected, but also in Russia, and will lead to protests. But Putin is still sitting securely in the saddle. On 25 September, Putin held referendums in the republics of Luhansk and Donetsk, which is problematic because most of the people there have fled. In the elections, ballot boxes were brought directly home. Putin, however, probably wants to create new facts and then annex the area just like Crimea before, which again will not go down well in the West. Also tough

Meanwhile, hard fighting continues on the front lines and Donetsk is also being shelled by Ukrainian artillery, where civilians are also dying. A defensive war is now turning into a war of aggression by Ukraine. Germany and the EU must be careful that this does not lead to a 3rd world war. Putin will certainly not put up with being pushed back to the Russian border, as he would then probably also be finished off in his own country. Putin threatened with nuclear weapons, as did Medvedev.

Porsche plans IPO despite negative environment – Chapeau!

In spite of all these clearly recognisable dangers, Porsche is now planning an IPO on the Frankfurt Stock Exchange on 29 September, in order to possibly also set an example, because recently the IPO market was globally dead due to the bear market. A successful IPO could even improve the mood on the stock market, which is looking very bad at the moment. Nevertheless, there is great interest from sovereign wealth funds such as Norway and Qatar, but also from other large institutional investors who think more long-term. The material for the private investor could therefore become scarce.

Zerich Securities Ltd offers participation in Porsche IPO and sale of Russian ADRs

However, the broker from Cyprus Zerich Securities Ltd offers its clients the opportunity to participate in the Porsche IPO via its Mind-money platform. This can be done via the link https://mind-money/eu/de/ipo-porsche . Zerich Securities Ltd is still offering to sell Russian ADRs at a discount of 20 percent until Wednesday. This can still be done via this link, which has been set up especially for German-speaking investors: https://mind-money.eu/de/faq-russian-adr-conversion.

The planned price range of Porsche’s IPO is €76.50 to €82.5. With an issue of about 900 million shares – half of them ordinary shares, the other half preference shares – the valuation of Porsche would then be €75 billion. The Porsche family wants to retain a majority stake in the company. If the IPO succeeds, it would be the second largest IPO in German stock market history.

The money raised will be used above all to push ahead with the production of electric cars. Even in the event of a recession, sales of Porsche cars should continue to do well worldwide, as a very special target group will still have enough money to afford a Porsche. Investors may even be tempted by a dividend yield of 10 per cent.

First inform, then invest

But there are also new opportunities on the stock exchanges of Eastern Europe (with the exception of the Moscow Stock Exchange). Inform yourself now in detail about the background and the development of the Ukraine/Russia crisis but also about the future recovery potential of undervalued shares from Eastern Europe. There are also new opportunities in the Baltics, Romania and Ukraine, with the respective stock indices all up in 2019.  For example, some Ukrainian agricultural stocks have already more than doubled in price since 2016, and in 2018 the PFTS index was already up over 70 per cent again. Kazakhstan stocks were among the top performers in the world in 2017 (+56 per cent), but not in 2018 and not in 2019, but again in 2020/21.

In 2018, 10 stock markets from Eastern Europe were already among the best-performing stock markets in the world, all of which clearly outperformed the DAX and also the US stock market. In 2019, the Moscow Stock Exchange was once again the clear outperformer among all global stock markets, with a plus of over 46 percent in euro terms. However, the Bucharest Stock Exchange (Romania) also rose by over 32 per cent in 2019. The stock markets in Southeast Europe and also in the Baltic countries remained very stable on the plus side (Croatia +13 per cent). In 2020 year 6 stock exchanges from Eastern Europe were among the 30 best performing stock markets in the world and last year even 11 stock exchanges from Eastern Europe.  This year, 5 Eastern European stock exchanges, mostly from the Balkans, clearly outperformed the DAX. After the Ukraine war, it is still worthwhile to look beyond the horizon to Eastern Europe.

Order now a trial subscription (3 issues by e-mail for only 15 €) of the monthly stock exchange letter EAST STOCK TRENDS (EST) with another Ukraine/Kazakhstan/Russia special and a dividend special as well as with a lot of background information and new investment suggestions such as the “Stock of the Month” and lucrative certificates at www.eaststock.de, there under Stock Exchange Letter.  The last EST was published on 12 September 2022.

TV/radio notes: The last radio interview was on Börsen Radio Networks on 23 August 2022.  The next Börsen Radio Networks interview will be in October. Please also note the last EastStockTV video on YouTube about the Ukraine war and the new outperformance opportunities of the Eastern European stock markets as well as the Stock Exchange Talk with Rainer Hahn and Bastian Stein on 3 September 2022. You can download the interviews at wwww.eaststock.de, there under the heading “Interviews” as well as the videos of EastStockTV. By the way: have you already subscribed to the EastStockTV YouTube channel? Andreas Männicke will also give a talk at Freedom Finance on 8 October at the Börsentag in Berlin.