- BRICS & Co focus on expansion and cooperation –
The countries Brazil, Russia, India, China and South Africa in short “BRICS”, agreed at the BRICS Summit in Johannesburg from 22 to 24 August to include 6 more countries that cooperate and do business with each other on the basis of multipolarity. The countries added as of 1 January 2014 are Argentina, Egypt, Ethiopia, Saudi Arabia, Iran and the United Arab Emirates. A new internal clearing unit for the BRICS was discussed, but not yet concretised. The meeting in Johannesburg already shows that Russia is not isolated but is looking for new economic partners. The death of the head of the Wagner Group, Prigozhin, is likely to have consequences. Putin has a lot to be prepared for in the autumn.
Until the end of August, 11 stock exchanges from Eastern Europe were among the 30 best-performing stock exchanges in the world – led by the Budapest Stock Exchange with a 33 percent increase in the HTX index. Russian shares are still not tradable on Western stock exchanges because of the mutual sanctions, but some Russian shares and bonds will soon be tradable again over the counter via the broker Zerich Securities Ltd. from Cyprus. One example is the Russian consumer chain Fix Price, which made an IPO on the London Stock Exchange before the war. Another example is VKontakte (VK), the Facebook of Russia, which can now be bought at a discount on the OTC market. But before that, an account must be opened, which can easily be done at this link: https://trade.mind-money.eu. In addition, it is now still possible to buy the Russian gold and silver producer Polymetal via the broker Freedom Finance (or Freedom Broker) on the AIX stock exchange in Kazakhstan, which has already risen by over 50 percent after the buy recommendation 2 months ago, which shows the great opportunities. Via Freedom Broker you can now also buy about 10 Russian shares or ADR at discount prices in the OTC market, which should pay off in the medium term, as the example of Polymetal already showed (+ 50 percent in a few weeks). Opening an account with Freedom Broker is quickly possible online via this link: https://freedom24.com/invite_from/2952896.
Andreas Männicke also gives his assessments of the new opportunities in his stock market letter EAST STOCK TRENDS (www.eaststock.de) and in his new EastStockTV video, episode 217 at www.YouTube.com
“BRICS” expands as a counterweight to “G 7
At the “BRICS” meeting in Johannesburg, no new “BRICS” currency was presented yet, but the firm will to bring more and more countries on the side of the “BRICS” countries was confirmed, also in order to be able to stand up to the G7 countries. From 1 January 2024, Argentina, Egypt, Ethiopia, Saudi Arabia, Iran and the United Arab Emirates will be added to what is now called “BRICS-Plus”. The “plus” is to be expanded more and more.
22 other countries were present at the BRICS meeting in Johannesburg that have also applied for BRICS membership, including many African countries that want to break away from the domination of the Western countries and emancipate themselves with other partners. 40 countries are now interested in joining the BRICS. Before the 6 countries were admitted, there were 23 aspirant countries, with the above 6 countries making a kind of rush application which was considered.
Other countries like Cuba, Venezuela, Honduras, Bolivia or Turkey are in the queue. They are supposed to be a counterweight to the Western G7 meeting. But this also points the way to a new world order with countries that strictly reject US domination. Already, BRICS & Co account for more than 50 per cent of the world population and 30 per cent of the world GNP without the 6 new countries it would be 40 per cent of the world population and 25 per cent of the GDP. The “BRICS” countries have a total population of 3.25 billion people. China not only plays the biggest role economically, but also as a peacemaker, as was already the case successfully between Iran and Saudi Arabia. China is now also becoming more and more involved in the Ukraine war as a peacemaker.
Niger strives for independence from the West, as do many African countries.
The examples of Niger, Bukina Faso and Mali, and now also Gabon in Central Africa, where there was also a military coup, already show where the hare is heading in Africa, at least not towards the West. Western interference is unwelcome in these countries, but support from China and Russia is welcome. So there is also a paradigm shift taking place on the African continent, which in the future will be the most populous continent in the world with great growth opportunities and good demographic potential. Africa already has a population of over 1.4 billion people, and the trend is rising fast.
Is another proxy war coming to Niger?
It would be no surprise if the conflict in Niger degenerates into another proxy war as soon as the conflicting parties cannot reach a peaceful agreement, similar to the Ukraine case. In the case of Niger, the main issue is the mining of uranium, which is not insignificant for France’s nuclear power plants. Macron now wants to “reconsider” the friendship with Niger, but not to withdraw the French ambassador. In Niger, many supporters of the coup plotters have protested against the presence of 1500 French soldiers in Niger. Niger is only one example of many where African countries do not agree with the too strong influence of Western countries. Another example is Kenya, which is now looking for non-Western partners.
BRICS currency a difficult project for the future
A new unit of account for the “BRICS” countries is being prepared, but will not be on the table until the next BRICS meeting in Kazan in 2024 at the earliest. Nevertheless, most of the BRICS countries already want to push ahead with de-dollarisation and, at least for commodity contracts, no longer use the US dollar as the unit of account, but their own currency or alternatively the yuan, which could become the new reserve currency in the BRICS region. It is still problematic when non-convertible currencies like the Indian rupee come into play. For example, Russia now has large sums in the billions in Indian bank accounts because of the oil deliveries, but does not know what to do with them. In this respect, a “BRICS” unit of account would be advantageous for all involved, but it is difficult to implement in practice. The US dollar still remains the main trading currency, even for commodities.
FED in a quandary
The BRICS meeting in Johannesburg had no impact on the development of the world stock markets and the US dollar, but it could have in the distant future if a new BRICS currency really emerges. This would then also have an impact on the US dollar and the gold price, but it is still too early to talk shop about this. As expected, the world stock markets fell into a summer slump in August and consolidated a little, including the Eastern European stock markets. In September, the Fed will have a lasting influence on further developments. A further interest rate hike would certainly be detrimental, as the imbalances in the US banking sector would then become ever greater and the USA could enter a recession in the fourth quarter. On the other hand, the labour market in the US has so far proved surprisingly robust and the rise in oil and gas prices should fuel inflation again.
Paprika into the portfolio: Budapest stock exchange as top performer in Eastern Europe (+33 percent)
Nevertheless, it is worth looking beyond the horizon to Eastern Europe right now, as whole new opportunities are opening up here for risk-oriented investors away from the mainstream, even in Russia, but also in Kazakhstan and Hungary. The Budapest Stock Exchange is by far the best-performing stock exchange from Eastern Europe so far, with the HTX index up 33 per cent. The generic drug manufacturers Richter Gedeon and Egis continue to offer particularly good opportunities.
11 stock exchanges from Eastern Europe are again among the 30 best-performing stock exchanges in the world. The CECE index with Hungary, Poland and the Czech Republic in the boat has always risen since the beginning of the year by 21 percent to 1627 index points, far better than the DAX with a plus of 13 percent. The S&P index, with a plus of 17 percent since the beginning of the year, also performs much worse than the CECE index. The HTX index, an artificial product of the Vienna Stock Exchange for Hungarian shares, even rose to a new annual high of 4652 index points in August, which means a plus of 33 percent since the beginning of the year. But also the CROX index for shares from Croatia reached a plus of 30 percent since the beginning of the year. The KTX index for shares from Kazakhstan has so far achieved a plus of 25 percent since the beginning of the year, all much better than the DAX with a plus of “only” 13 percent since the beginning of the year.
Far too few German investors, however, dare to look beyond their own backyard to take advantage of these clear outperformance opportunities. The Eastern European “pearls” are hardly discussed in Western media and stock market magazines and are treated very “step-motherly”. Yet the Eastern European economies have on average twice as high growth rates with half as much national debt.
Kazakhstan shares as a good alternative to Russia: +25 percent with the KTX index!
However, one stock market that deserves more attention from Western investors is the Kazakhstan stock market. Kazakhstan’s economy is developing very positively and, like Russia, it has very extensive raw material deposits. Kazakhstan shares are undervalued and usually bring very high dividend yields. Very good quarterly and half-year figures were recently reported by the fintech share Kaspi.kz and the world’s largest uranium producer Kazatomprom. The KTX index for Kazakhstan shares even rose to a new annual high of 674 index points in August, which means a plus of 25 percent since the beginning of the year, also much better than the DAX or S&P index. You can now order Kazakhstan shares directly online on the Kazakhstan Stock Exchange by opening an account with Freedom Broker at the following link: https://freedom24.com/invite_from/2952896
Polymetal shows the way: +50 percent in Kazakhstan!
The purchase of the Russian gold and silver producer Polymetal, which was also strongly recommended as “Stock of the Month” 2 months ago in the stock exchange letter EAST STOCK TRENDS (www.eaststock.de), has been particularly worthwhile in recent weeks. The share was delisted on the London Stock Exchange because of the sanctions and re-listed on the AIX in Kazakhstan. The share price has already risen over 50 per cent in US dollars in a few weeks since the recommendation, but has the potential to double in price, as that would be the price on the Moscow Exchange at present.
Russian companies in restructuring process
Russian ADRs are still not tradable for Western investors on Western stock exchanges due to mutual sanctions and foreigners are still not allowed to trade original Russian shares on the Moscow Stock Exchange. Nevertheless, new opportunities are now opening up in the OTC market with Russian shares or ADR. Many Russian companies are now in a restructuring process and want to relocate and list on a new stock exchange similar to Polymetal before. In the process, Russian assets are to be sold in part and foreign activities outside Russia are to be brought to the fore. Or only a relocation of the registered office is being considered in order to avoid sanctions.
Go “bargain hunting” now with Russian ADR at discount prices!
Freedom Broker (or Freedom Finance) from Cyprus, for example, is now offering to buy the shares or ADRs of 10 Russian companies in the OTC market at discount prices in order to sell them later under different conditions at higher prices – similar to the last time – with Polymetal. Here, too, new opportunities are now arising in the OTC market with Russian ADR. The list and chances of success of the companies in question will be published in the next stock exchange letter EAST STOCK TRENDS (www.eaststock.de), but will also be presented by Andreas Männicke at the Berlin Stock Exchange Day on 21 October 2023. In order to take advantage of these extraordinary 50 to 100 percent opportunities with shares from Russia and Kazakhstan, you must first open an account with Freedom Broker, which can be easily done online at the following link: https://freedom24.com/invite_from/2952896
Buy Russian discounters at discount prices
But there are also new opportunities in the OTC market for companies that want to stay at home, such as the discount chain Fix Price, which can now be bought through the broker Zerich Securities Ltd from Cyprus. Fix Price is a Russian discount chain that continues to expand very successfully in Russia and the CIS republics. You can now buy the shares at 2 USD on the OTC market. So buy a Russian discounter at discount prices now!
VKontakte is now growing much more dynamically than before
Another opportunity now offered by Zerich Securities Ltd. is the company VK (VKontakte), i.e. the Facebook of Russia, which benefits from the fact that Facebook or Meta was banned in Russia and is now growing even faster than before. VK is the largest social network in Russia and Ukraine with over 100 million users, The company is seeking to relocate its headquarters from Virgin Islands to Kaliningrad. This company will be presented in detail in the next stock letter EAS STOCK TRENDS (www.eaststock.de) as “Stock of the Month”. In addition, Zerich Securities Ltd offers Gazprom bonds on the OTC market at discount prices.
If you still have questions about the realisation of Russian ADRs, you are in good hands with both brokers, who will assist you in word and deed. They both have very good contacts in Russia and can help with many questions. Each Russian ADR is treated differently depending on the sanction and has different possibilities for buying and selling in the OTC market.
What all Russian ADRs have in common is that they are now offered very cheaply in the OTC market at a deep discount to the prices on the Moscow Exchange because of the sanctions. After the war, however, the investment world in Russia may look quite different again. The above-mentioned shares or ADR should be understood as long-term investments anyway. If you are interested in buying Fix Price or AK now at discount prices, you must first open an account with Zerich Securities Ltd, which is easy to do online at the following link: https://trade.mind-money.eu.
Ruble stabilises after interest rate hike, but note high currency risks
However, the high currency risks must also be taken into account. The euro has already risen by 75 percent against the rouble in 1 year, from 60 to 105 EUR/RUB, at its high 110 EUR/RUB. In order to counteract the decline of the rouble, the Russian central bank recently raised the interest rate from 8.5 to 12 percent. The rouble recovered briefly from 110 to 100 EUR/RUB, but has now already fallen again by 5 per cent to 105 EUR/RUB. In August, the MOEX index in roubles rose by almost 40 per cent in 1 year to a new annual high of 3210 index points, while the RTS index in US dollars fell by 13 per cent in 1 year to 1050 index points.
Russian Economy Develops Better than the German Economy
The Russian economy, however, is developing surprisingly robustly despite the harshest sanctions ever suffered by a country. This year, a GNP growth of more than 2 percent is expected, while Germany may enter a recession with a minus of 0.5 percent. The sanctions were and are in part nonsensical and harmed German companies more than Russia, also due to the excessively high energy costs, which is now clearly visible.
First inform, then invest
But there are also new opportunities in Eastern Europe in general, where there are always outperformance opportunities. 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 Baltic States, Kazakhstan, Georgia and Ukraine.
The HTX index for shares from Hungary by 33 percent, and the CROX index for shares from Croatia by 30 percent and the KTX index for shares from Kazakhstan by 25 percent – all significantly better than the DAX with a plus of “only” 13 percent. The CECE index (with Poland, Hungary and the Czech Republic in the boat) also rose by as much as 22 percent. So even after the Ukraine war, it is still worth looking 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/bond 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 next EST will be published in September 2023 with a special on Kazakhstan and Russian ADR/Russia.
Lecture note: Andreas Männicke will give a lecture for Freedom Broker at the Berlin Stock Exchange Day on 21 October 2023 on the topic “New Opportunities in Russia and Kazakhstan”, to which you are cordially invited. The lecture is free of charge.
TV/radio notes: The last radio interview was on 2 March 2023 and previously on 31 October 2022 on Börsen Radio Networks. The next radio interview is on 2 October 2023 Stock Exchange Radio Networks. Also watch the latest EastStockTV video on YouTube about the Ukraine war and the new outperformance opportunities for Eastern European stock markets. You can download the interviews and videos at www.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?