Gas shortage threatens production

A sword of Damocles hangs over German and, to some extent, European industrial production. If Russian gas is no longer supplied, there is a risk of further price losses. The US stock market currently offers a better risk-reward ratio. In addition, selected bonds offer opportunities with manageable maturities.

The authors

DJE's team of analysts monitors and evaluates the markets on an ongoing basis using the in-house FMM method based on fundamental, monetary and market criteria. The team summarises their findings once a month.

From the analyst team of DJE Kapital AG

June 2022 was also a challenging stock market month - after the already very difficult months of April and May. The first half of 2022 was the worst since 1970 for the American S&P 500 with a price loss of -20.6% in US dollars. Also, the American technology exchange NASDAQ recorded its worst quarter since 2008 in the second quarter of 2022 with a loss of -22.5% in US dollars.

The economic market environment is likely to remain extremely challenging in the coming months: There is no improvement in sight in the fundamental and monetary indicators in the short term, and the geopolitical situation is also likely to remain difficult. We have therefore decided to take an even more defensive stance and to further increase cash ratios.

Should Russia, or the Russian state energy company Gazprom, stop supplying gas after the annual maintenance of Nord Stream 1 (10-20 July 2022), the stock markets in Germany and Europe could come under pressure again. We will therefore reduce the weightings of Germany and Europe again. The US market currently offers the better risk-reward ratio.

In the course of the first half of 2023, the entire stock market environment could improve, provided the US Federal Reserve moves away from its restrictive course. In our view, selected bonds continue to offer opportunities: It is possible to again find US dollar bonds with yields of over 5% and Euro bonds with a good 4% yield - with still manageable maturities.


  • Selected bonds again full of opportunities
  • Manufacturing sector in Germany and Europe with loss potential
  • Defensive equities remain in focus

We will continue to reduce the equity quotas: In the case of mixed funds, we consider a reduction by another 5% to be reasonable, and in the case of pure equity funds, we will tend to stay at the lower end of the permitted quotas. German and European equities in the energy-sensitive production sector would be particularly at risk if gas deliveries were to fail. In contrast, equities of companies that could benefit from the failure of the German industry could be promising. We also see individual investment opportunities in fixed-income securities with currently high yield levels.

Economy / Regions

  • Gas shortage weighs on production
  • Inflation and interest rate expectations continue to decline
  • Looser Fed policy could help the stock market

Since mid-June, the Russian energy company Gazprom has reduced its natural gas deliveries via Nord Stream 1 by about 60%. The reason given by Moscow: a gas compression turbine from Siemens Energy, which had been sent to Canada for maintenance, is now stuck there due to the sanctions. The consequence: another massive increase in energy costs in Germany and Europe. If gas deliveries are stopped after the completion of the maintenance of Nord Stream 1 (planned after 21 July), this is likely to have a serious impact on Germany in particular, especially on industrial production. Medium-term inflation and interest rate expectations continue to decline. The US Federal Reserve is unlikely to be able to keep up the announced cycle of interest rate hikes and liquidity taps. Should the Fed deviate from its current course during the first half of 2023, the stock market environment could improve.

Sectors / Equities / Rating

  • Downsizing mainly in the industry/manufacturing sector
  • Telecommunications and insurances offer opportunities
  • Pricing power and profitability decisive

In our view, German and European stocks in the energy-sensitive industrial sector could suffer further price losses. Therefore, we concentrate on reducing companies whose focus is on production or which are heavily dependent on consumption in Germany. On the other hand, we consider shares from the telecommunications sector with a high foreign share and from the insurance sector to be promising. Shares in companies that benefit from the failure of German industry could also be interesting. We continue to focus on criteria such as the pricing power of companies and a strong market position or the ability to maintain margins.

Currencies / Commodities / Gold

  • Economic headwinds in Europe
  • No US dollar hedges

The economic headwinds in Europe are stronger and the uncertainty higher than in the USA. US dollar hedges are therefore not necessary.


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