- Calm before the storm on the world’s stock markets?
Things are getting lively in the carnival strongholds. After the corona-related break, it’s time to party, drink and sway again. This is also known as the “foolish times”. One may wonder whether the foolish times are now also beginning on the world’s stock markets, as investors have so far been relatively unimpressed by the geopolitical and political tensions. Driven by the AI euphoria, Wall Street even celebrated new all-time highs on 9 February. The S&P index passed the 5000 mark for the first time on 9 February. At the same time, there are major problems in the USA with loans for office property, which the market is currently ignoring.
But investors on Wall Street are not the only ones in a champagne mood. 10 stock exchanges in Eastern Europe are once again among the best performing stock exchanges in the world. To the surprise of many investors, the Budapest Stock Exchange also continued last year’s rally.
The KTX index for shares from Kazakhstan even closed the first week of trading with a plus of 4 per cent, having already achieved a plus of 32 per cent last year. Risk-averse investors can buy Kazakhstani shares directly online via the broker Freedom Finance (Freedom Broker) from Cyprus if they open an account there beforehand, which is easy to do at the following link:
https://freedom24.com/invite_from/2952896 . Although Russian ADR or original shares are still not tradable due to the sanctions, new opportunities may now arise again with some Russian ADR/GDR, which you can now buy at discount prices on the OTC market via the brokers Zerich Securities Ltd or Freedom Finance from Cyprus. Interesting stocks on the OTC market are above all the Russian discounter Fix Price, which has now also gone public on the stock exchange in Kazakhstan, and the IT stocks VKontakte and Yandex (more on this in the stock market letter EAST STOCK TRENDS (www.eastststok.de). However, you also need to open an account beforehand, which is easy to do at this link: https://trade.mind-money.eu
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 224 at www.YouTube.com.
AI shares are going through the roof
The artificial intelligence euphoria continues in the USA. Companies such as Nvidia and Microsoft went through the roof and reached new all-time highs. Nvidia’s market capitalisation rose to a new record of USD 1.77 trillion and Microsoft’s from USD 2.89 trillion. USD and Microsoft from 2.89 trillion USD. Microsoft is now the world’s heaviest company by market capitalisation. Both companies together are worth more than all 40 companies in the DAX combined. Nvidia has increased its market capitalisation in two months by as much as Tesla is now worth, namely USD 565 billion. At the same time, Nvidia’s price/earnings ratio of 21 is still quite moderate. The value of Nvidia has increased sevenfold since its low in 2022, from USD 100 to over USD 700. However, the question is how long this impressive price rally in AI shares will continue.
Is a new banking crisis coming to the US?
With the exception of AI shares, the economic outlook in the US is not very rosy this year. And after the good US labour market data, the Fed is not expected to cut interest rates any time soon. On the contrary: US bond yields have already risen slightly again, as has the US dollar. As a result, commodities such as oil, copper and gold have also stagnated, while Bitcoin has already risen sharply from USD 40,000 to USD 46,000/BTC following the correction. The high interest rates are now again causing problems for some US regional banks, which are having to make high provisions for commercial property loans. We can only hope that there will not be another US banking crisis in March due to distressed regional banks.
The Middle East remains a powder keg
One can only hope that the Israeli war will not turn into a Middle East war if Iran becomes even more actively involved in the war. Israel is now also attacking the southern city of Rafah, where Netanyahu has now ordered an evacuation. It is now very doubtful whether a ceasefire will be reached soon in exchange for the exchange of hostages. The US recently attacked positions in Syria and Iraq, but is also continuing to fight the Houthi rebels in Yemen, who in turn are firing on ships in the Suez Canal, which has already led to supply bottlenecks for companies.
Will the USA abandon Ukraine in the future?
The war in Ukraine could also escalate quickly if Poland actively intervenes as a military power and sends its own soldiers to Ukraine, which is already happening in the form of mercenaries. There are also many mercenaries from the USA and Georgia and the question is how Putin will react to this. NATO now sees Russia as its main enemy and is preparing for war against Russia in a major manoeuvre. Poland is doing the same.
The USA is still arguing in the Senate and Congress about the USD 60 billion in aid for Ukraine because the Republicans are (still) against it on Trump’s “orders”, while the EU has now approved the EUR 50 billion in aid now that Hungarian President Orban has also withdrawn his veto. However, if the American aid is not granted, the EU will face major challenges. In any case, it would be better for the EU, and Germany in particular, to endeavour to achieve a ceasefire than to send more and more weapons to Ukraine.
EU wants to adopt new sanctions package against Russia
On the second anniversary of the war in Ukraine, the EU wants to impose the 13th package of sanctions against Russia. The list still includes 100 Russians who have been sanctioned. So far, assets totalling €21 billion have been confiscated and €300 billion in currency reserves have been blocked. None of this has done much good so far. On the contrary, Germany is in recession, not least because of the sanctions, while Russia has a GDP growth rate of over 4 per cent. Russia has switched to a war economy and created 500,000 additional jobs in this sector. Presidential elections will be held in Russia in March, where Putin has no serious competition to fear.
Selenskyi sacks commander-in-chief Salushnyi
Ukraine is facing an increasing shortage of ammunition and soldiers. Ukrainian President Selinskyi has now replaced the commander-in-chief of the army, Valery Salushnyi, with Olexander Syrskyi, a move that has met with little favour either in the army or among the population. In contrast to Russia, there will be no presidential election in March due to the war, but it may well be that Salushnyi will run against Selinskyi in the future.
Putin interview with Tucker Carlson causes a stir in the West
Putin recently conducted a highly publicised interview with the well-known US journalist Tucker Carlson, which was published on Twitter and has already been seen by over 70 million people, but which the West was not at all enthusiastic about. The EU is even considering penalising Tucker Carlson with sanctions and an EU entry ban. In the Western press, Putin is only ever portrayed as a liar and war criminal, which is also a form of propaganda. We can only hope that the war in Ukraine does not escalate further and spread to Poland or the Baltic states, because then we would very quickly have a third world war. Some Western politicians are obviously not aware of this danger. All these economic and geopolitical risks are currently being ignored on the world’s stock markets, which may yet take its revenge. Because now the foolish times are coming.
AI stocks are good, small caps are bad!
As was the case last year, the rise in the S&P Index and even more so in the NASDAQ Index is mainly driven by the 7 “magic” stocks with AI fantasy. The Russel 2000 Index, on the other hand, is actually down slightly. The situation is similar in Germany, where second-line stocks are hardly in demand and the MDAX is down. Most investors are also unaware that Eastern Europe offers the best investment opportunities with value stocks and high dividend yields.
Another 10 Eastern European stock exchanges in the top 30 in 2024!
10 stock exchanges from Eastern Europe were among the 30 best-performing stock exchanges in the world until 9 February 2024. The best performers so far were the stock exchanges from Ukraine (+8.1%), Hungary (+5.8%), Slovenia (+5.0%), Croatia (+4.4%), Kazakhstan (+4.2%), Bulgaria (+4.1%), Russia (+3.6%), Romania (+3.0%), the Czech Republic (+2.6%) and Lithuania (+1.9%). In red 10 Eastern European stock markets, whereby all 10 clearly outperformed the DAX until 9 February!
Growth in Eastern Europe is on average twice as high as in Western Europe, but government debt is only half as high. It is therefore still worth taking a look at Eastern Europe, although Russian shares are still not tradable due to the sanctions. However, shares from Kazakhstan are now a good alternative for Russian shares. The KTX index for shares from Kazakhstan rose by over 40 per cent last year and by 4.2 per cent this year, far better than the DAX with +1 per cent.
Investors who would like to trade directly online in Kazakhstan should open an account with the broker Freedom Finance (Freedom Broker) from Cyprus at the following link: https://freedom24.com/invite_from/2952896
However, investors can still buy Russian ADRs at discount prices in the OTC market via Freedom Broker. Similar opportunities are also available via the broker Zerich Securities Ltd from Cyprus, if you open an account via the following link: https://trade.mind-money.eu A list of tradable Russian ADR is published in the stock market letter EAST STOCK TRENDS (www.eaststock.de). Both brokers also offer participation in lucrative IPOs on Wall Street as well as high returns on overnight and fixed-term deposits.
First inform, then invest
Find out more now about the background and development of the Ukraine/Russia crisis as well as the future recovery potential of undervalued shares from Eastern Europe. There are also new opportunities in the Baltic states, south-eastern Europe and the CIS republics (Kazakhstan, Georgia), with the respective share 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 the first month of trading, 10 stock exchanges from Eastern Europe outperformed again with a small gain. It is therefore still worth taking a look beyond the horizon to Eastern Europe after the war in Ukraine.
Order a trial subscription now (3 issues by e-mail for only €15) to the monthly stock market letter EAST STOCK TRENDS (EST) with another Ukraine/Kazakhstan/Russia special and a dividend special as well as lots of background information and new investment suggestions such as the “Share of the Month” and lucrative certificates at www.eaststock.de, under Stock Market Letter. The last EST was published on 26 January 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. You can download all radio and TV interviews in the video archive at www.eaststock.de, including the last video in EastStockTV, episode 224. By the way: have you already subscribed to the EastStockTV YouTube channel?