- Eastern Europe outperforms –
Even before his inauguration, US president-elect Donald Trump was already the talk of the town and the centre of attention. This may give us a small taste of what to expect this year: plenty of surprises and change. But it will also be the beginning of a new world order, which will be fiercely contested with the main rivals USA and China and its allies. Indonesia has now also joined the BRICS as a full member. The topic ‘G7 versus BRICS’ will continue to haunt us throughout the year with increasing significance. There will be many political and economic surprises this year.
The stock, commodity and crypto markets will continue to be very volatile. A crash cannot be ruled out either. The fires in Los Angeles have a certain symbolic character: a lot is being burned – including assets – and chaos is emerging, but something new will emerge from the chaos. At the beginning of the year, oil and gas prices in particular rose sharply, which can be exploited well via the oil and gas ETC of BNP Paribas (). If Trump manages to achieve a ceasefire and an end to the war in Ukraine in the first half of 2025, there will be special opportunities on the Kiev stock exchange, which is already being bet on. That would be the ‘Trump Trade 2.0’. Last year, the MSCI Ukraine Index rose by over 60%, making it one of the top performers among global stock market indices. This year, equities in Ukraine have already risen by almost 10%.
But the KTX Local Index for equities from Kazakhstan also rose by more than 30% last year.. It is now up by more than 6% again and is a clear outperformer. Investors willing to take risks can buy shares from Kazakhstan directly online through the broker Freedom Finance (Freedom Broker) from Cyprus, if you open an account there first, which is easily possible under the following link: https://freedom24.com/invite_from/2952896 .
Andreas Männicke also gives his assessment of the new opportunities in Eastern Europe in his stock market letter EAST STOCK TRENDS (www.eaststock.de) and in his new EastStockTV video, episode 244 at www.YouTube.com. You can also register for free on the new BRICS TV channel on YouTube and order the new BRICS Trends stock market letter by emailing info@eaststock.de. You can watch the first BRICS TV video here: https://www.youtube.com/watch?v=FEKI72GKCzs&t=315s Please also register if you are interested in a new BRICS newsletter. You can also read an introduction to the BRICS topic in VTAD News No. 42 and/or request it by emailing info@eaststock.de.
Trump causes a lot of excitement and confusion even before his inauguration
The new US President Donald Trump caused a lot of excitement and attention around the world with a press conference even before his inauguration on 20 January. He wants to buy Greenland from Denmark, make Canada the 51st state of the USA, claim the Panama Canal for himself and rename the Gulf of Mexico the Gulf of America. Trump has a great interest in annexing Greenland and Canada because these countries are part of the Arctic, where there are said to be enormous raw material deposits in the Arctic. Russia owns 50 to 54% of the Arctic, the USA only 24% so far. But China has also expressed interest in the Arctic. So once again it is about the fight for raw material deposits, which has often led to wars. That is why Trump does not rule out the possibility of wanting to solve the problem militarily.
But so far he has met with rejection and a lack of understanding everywhere. He is also now demanding that European countries put 5 percent of their GDP into the defence budget, which is also being met with rejection. It remains to be seen whether he can push through his plans with his very aggressive tariff policy. But Trump is also threatening Hamas. He is demanding the release of all hostages before taking office, otherwise ‘all hell will break loose in the Middle East’. As a result, the oil price rose sharply.
In addition to Elon Musk, Zuckerberg now also seems to be moving from Meta to Trump’s side by no longer allowing fact checkers and thus, as with X, allowing more freedom of speech and writing on his Facebook platform. He is now counting on the responsible citizen. However, in the AI age, which is progressing ever faster, it is now increasingly difficult to recognise the truth and expose lies.
Trump creates chaos before a new order emerges
All of Trump’s announcements may give us a small taste of what to expect this year in the new ‘Trump era’: it will be a year of many positive and negative surprises, which will sometimes also create chaos. But out of the chaos, something new will arise again. From a purely astrological point of view, 2025 is the year of transformation and completion, with many cosmic events. Accordingly, the USA will be hit particularly hard by natural disasters such as fires, earthquakes, volcanic eruptions and floods. Trump will have a very difficult time in the USA, especially in the first 3 months of his term of office. Even bomb attacks on Trump are possible. It remains to be seen how long Trump and Musk will remain best friends. Old systems are being replaced by new ones. Many politicians will give up and leave their posts, as Canadian Prime Minister Justin Trudeau recently did, who led a minority government.
Elon Musk supports the AFD – is this external influence on the election?
The interview between Trump advisor Elon Musk and Alice Weidel also received a lot of media attention. Elon Musk said that ‘Germany can only be saved by the AFD’, which is a clear statement of partisanship. However, Elon Musk does not only have friends in the Trump camp. Steve Bannon, a former advisor to Trump who even spent four months in prison for Trump, wants to protect Trump from Musk, who is allegedly only out for himself. Musk donated a record $100 million to Trump’s election campaign. However, it is questionable whether Trump and Musk will continue to work together so harmoniously. It is not unlikely that there will be assassination attempts on both Musk and Trump this year, because they have also made many new enemies through their provocative statements.
Right-wing shift not only in the USA but also in Europe
From a purely political point of view, there is a growing trend towards right-wing conservative and patriotic parties in 2025, which can be strengthened by Elon Musk and Donald Trump. It will be interesting to see the election results on 23 February in Germany, where the right-wing conservative AFD could even get over 20 percent of the vote. In Austria, the FPÖ has now been tasked with forming a government, and it remains to be seen whether a coalition can be formed there. Macron will make every effort to stop Le Pen in France, but this will be difficult due to a lack of funds. There will be a wave of protests in France this year and civil unrest in Paris. Le Pen is flirting with Meloni and Orban to expand power in the EU. The Italian Prime Minister Giorgia Meloni has also met very amicably with Elon Musk and the chemistry seems right. What is brewing there?
How far will Trump go with the BRICS?
Trump also threatened the BRICS countries with a 100% increase in tariffs if they introduced a new BRICS currency. On 5 January, Indonesia officially became the tenth full member of the BRICS Plus countries, which want to create a new multipolar world order under the leadership of China and abolish the dominance of the US dollar. The ‘G7 against BRICS’ struggle, which has been raging at various levels for a long time, could also lead to a new Taiwan war. China is already setting up new military bases such as air defence systems in Serbia. Serbia has a partnership with China, but also with Russia. Is this a preparation for a 3rd World War?
Is there a threat of a new currency war?
In any case, a currency war is now looming due to the strong US dollar, where emerging market currencies in particular will be heavily devalued and suffer, as is already the case in Mexico and Brazil, among others. But the euro is also becoming increasingly weaker and will likely soon end up at parity, which is also due to Trump, who is now attracting a lot of foreign capital to the US. But the US dollar is also so strong because of the high interest rate differential with the euro, which amounts to more than 2 percentage points.
Trump wants to achieve his goals by making threats and making America strong. But this year he will realise how vulnerable the US is. The fact that unknown drones fly over New Jersey and New York at night and no one knows where they come from or what they want already speaks volumes.
Is Trump Trade 2.0 coming?
It will be interesting to see whether Trump manages to end the war in Ukraine in the first half of 2025. If he does, investors should pay particular attention to Ukrainian and Polish stocks, which will benefit from the end of the war. I call this the Trump trade 2.0, which you should not miss. After his election victory, Trump caused Tesla to rise by 80% and the S&P index to rise by 15%, but some stocks from Ukraine rose almost as sharply as the iron ore producer Ferrexpo. However, only very few investors in the DACH region were involved.
Now is the time to bet on oil stocks and the BNP Paribas energy ETC.
On the other hand, Trump is threatening a new war between Israel and Iran. In the run-up to a possible military conflict that will affect the entire Middle East, oil and gas prices have already risen sharply. On Friday, the price of Brent crude rose by 3.2% to almost USD 80/barrel and the WTI oil price also rose by 3.2% to USD 76.6/barrel, which corresponds to an increase of 8% from USD 74 to 80/barrel since the beginning of the year and 26% since November 2024. Oil stocks were therefore in demand again. You can also rely on the BNP Paribas ETC, such as the ETC on Brent oil, WTI oil or the gas ETC (see in detail at https://www.etp.bnpparibas.com/produkte). These ETCs are already all in the black and are outperforming the Wall Street indices or the DAX). Iran was also further sanctioned by the USA. Iran, like Saudi Arabia, has already joined the BRICS, where raw materials play an important role.
Russia conquers important raw material deposits in Ukraine
In the battle for raw materials, Russia has had very important military successes almost unnoticed by the public, with two small towns in eastern Ukraine near Donetsk, such as the towns of Prokowsk in the Donbas and, in particular, Shev chenko in the Donetsk region, which is a disappointment for BlackRock, because there are large lithium deposits there that would be very important for Europe. In addition, other small towns and villages have been taken, where there are large mining companies (including for hard coal), because the war is also about raw materials.
If Putin also manages to take the city of Donetsk by 20 January, he will have achieved his strategic goal and can negotiate with Trump from a position of strength. In the Kursk region, on the other hand, he suffered further defeats despite support from the North Koreans, as Ukraine advanced somewhat there. The Kursk region is likely to be introduced as a bargaining chip for Crimea or areas in eastern Ukraine, although Putin is resisting this. However, Ukraine is now also bombing industrial plants and oil refineries near Moscow with drones.
Good news is bad news
The world’s stock markets trended mostly friendly at the beginning of the year until 9 January, with the DAX even performing slightly better than Wall Street. However, US labour market data was better than expected on Friday, with 155,000 new jobs created in December and the unemployment rate falling to 4.1%. However, good news is now becoming bad news on the stock market, because there is now less chance of further interest rate cuts by the FED this year, especially as inflation rates in both the US and the EU have risen again in the last two months. Most now expect only one interest rate cut by the FED in March and then no more.
The S&P index therefore fell by 1.54% to 5925 index points on Friday, and the NASDAQ-Comp index by 1.63% to 19,162 index points. Joe Biden left behind an intact, but also a highly indebted US economy. Trump is well aware that he is short of money and that it is highly questionable whether his aggressive tariff policy will generate an additional USD 300 billion in revenue. It is also questionable whether he can finance the planned corporate tax cuts if the economy stagnates.
Rising inflation rates and bond yields are a cause for concern
Yields on 10-year bonds have recently risen to a new high of 4.7 per cent. This will make refinancing corporate and government bonds very expensive this year, which could prove disastrous for the US. There will still be very volatile times and sharp corrections on the world’s stock markets. While the DAX has been able to record a slight gain of 0.95% since the beginning of the year, all indices on Wall Street went into the red on Friday, which is a bad sign. Gold stagnated in USD at 2689 USD/ounce, but reached a new all-time high of 2625 EUR/ounce in euros, which represents an increase of 42% in one year. Silver rose 0.93% to USD 20.41/ounce or EUR 26.69/ounce on Friday, which means a 33.7% increase in USD and a 43% increase in euros in one year.
The euro fell to almost 1.02 EUR/US. It should soon reach parity. Among the crypto currencies, only Ripple (XRP) was in demand, although it has already increased fivefold since Trump’s election victory. Trump wants to work with Elon Musk to make the US a Bitcoin country, which would particularly benefit the US invention Ripple. But here too, there could soon be disappointments and bubbles could burst, because Fed Chairman Powell does not want to accept crypto currencies as reserve currencies, unlike Musk/Trump. This will lead to further tensions between Trump and Powell.
Significant outperformance opportunities remain in Eastern Europe
Unnoticed by most investors is the fact that, as in the previous year, 9 stock markets in Eastern Europe are among the 30 best-performing stock markets in the world this year, 6 of which have once again clearly outperformed the DAX. The year before last, the Central Eastern European stock markets in Poland, Hungary and the Czech Republic were particularly convincing as outperformers, with a performance of over 40%. Last year, it was mainly the stock market indices from the Balkan region, with price increases of over 30% in Slovenia, Croatia and Serbia, and over 30% in Kazakhstan. The top performer, however, was the Ukrainian stock market, despite the war there, with a 60% increase in the MSCI Ukraine Index.
But this year, too, many stock markets in Eastern Europe are once again among the top performers. The stock markets of the following countries have already clearly outperformed both the DAX40 index and all indices on Wall Street: Ukraine (+9.6% on the UTX index), Kazakhstan (+6.46% on the KTX< strong>-Local Index), Croatia (+5.95% on the CROX index), (Poland (+3.87% on the PTX index), the Czech Republic (+2.9% on the CTX index), Hungary (+2.4% on the HTX index) and Romania (+1.87% on the ROTX index). The CECE index (with Poland, the Czech Republic and Hungary on board) has already risen by 3.27% and the SETX index (for South-East Europe) has already risen by 1.11%. You can continue to rely on banks from Eastern Europe. But also keep an eye on the promising stocks from Kazakhstan.
Freedom Broker offers market access to Kazakhstan
The KTX Local Index for stocks from Kazakhstan has already risen by 30% last year and 6.5% this year. You can also buy stocks from Kazakhstan directly online through the broker Freedom Finance from Cyprus, which has the advantage that you can quickly receive the sometimes very high dividends into your portfolio. For example, Halyk Bank even has a dividend yield of 16% and a return on equity of 34%. The world’s second largest uranium producer, Kazatomprom, could benefit from Russia stopping the export of uranium to Russia next year. A counter-opening is easily done online at the following link: https://freedom24.com/invite_from/2952896 If you still need advice on how to exchange Russian ADR for original shares, Freedom Broker, which also has a branch in Berlin, is also the place to go. In particular, if the US sanctions are lifted, trading opportunities on the Moscow stock exchange may arise again, but this remains to be seen.
Inform yourself first, then invest
Find out more about the background and development of the Ukraine/Russia crisis, but also the future recovery potential of undervalued Eastern European equities. There are also new opportunities in the Baltic states, Southeast Europe and the CIS republics (Kazakhstan, Georgia), with the respective stock indices all up in 2023. In 2023, 12 stock exchanges from Eastern Europe were among the 30 best-performing stock markets in the world, with 5 clearly outperforming the DAX. In 2024, 9 stock exchanges from Eastern Europe have again outperformed with a strong increase. And at the beginning of the year, there were already 6 stock markets from Eastern Europe that clearly outperformed the DAX. It therefore continues to be worth looking beyond the horizon to Eastern Europe.
So order a trial subscription now (3 issues by email for just €15) of the monthly market letter EAST STOCK TRENDS (EST), which includes another Ukraine/Kazakhstan special and a dividend special, as well as a lot of background information and new investment suggestions such as the ‘share of the month’ and lucrative certificates at www.eaststock.de, there under Börsenbrief. The last EST appeared on 27 December 2024.
TV/Radio Notes: On 5 February 2024, Andreas Männicke was interviewed by Carola Ferstl on Money Talk about gold, commodities and the new opportunities in Eastern Europe. On 5 December 2024, Andreas Männicke was interviewed by Heinrich Leben on Börsenradio Networks about the new opportunities in Eastern Europe, particularly in Ukraine after the end of the war. All radio and TV interviews can be downloaded from the video archive at www.eaststock.de, including the latest video on EastStockTV, episode 244. By the way: Have you already subscribed to the new YouTube channel – BRICS-TV, in addition to the EastStockTV YouTube channel?
Reading note: in the new issue of VTAD-News No. 42, Andreas Männicke provides a detailed report on BRICS as a new investment opportunity.
Seminar note: If you are interested in new Eastern Exchange seminars ‘Go East’ or a BRICS seminar in Frankfurt/M or other cities, please contact the EST editorial team (www.eaststock.de ). If you are interested in Eastern stock market webinars and BRICS webinars, please also register.
You can now also order Andreas Männicke’s free newsletter with the latest news on the world and Eastern stock markets and on the BRICS at www.eaststock.de. Please also register at info@eaststock.de if you are interested in a new BRICS newsletter from Andreas Männicke.