Renewable energies with opportunities

Even though the stock markets recovered in October because inflation in the USA declined and the energy crisis in Europe eased temporarily, the global economy is likely to remain under pressure in November and the coming months. It remains important for companies to keep an eye on their cost structure. Opportunities could arise in renewable energies.

The authors

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

From the analyst team of DJE Kapital AG

According to the International Monetary Fund (IMF), the global economic outlook is bleak. This is true for the USA, even more so for Europe and especially for Germany. A worsening of the energy crisis in Europe would weigh heavily on growth and drive up inflation. A stronger economic slump in the coming months or in the coming year is very likely.

Despite the recent recovery, especially in the wake of lower-than-expected US inflation data, great optimism is hard to justify. On the positive side, US companies are now paying more attention to costs, which could provide opportunities for some US stocks. Europe is lagging on the cost-cutting front and will be more affected by the energy crisis in the medium to longer term. Therefore, we are cautious on manufacturing companies in Germany and Europe that are highly energy price sensitive and not very internationalised.

US inflation could continue to decline in the coming months. Nevertheless, the pressure on central banks to raise interest rates further and to remain restrictive for the time being is likely to remain high. According to the FMM model, the fundamental and monetary situation will thus remain negative for the time being, whereas we assess the market technology as positive.


    • Global economic outlook gloomy, especially for Germany and Europe
    • Renewable energies offer opportunities
    • Focus on companies with high pricing power
    • China remains difficult to assess
    • Opportunities in the commodities sector

Renewable energies offer opportunities Focus on companies with high pricing power China remains difficult to assess Opportunities in the commodities sector

The economic outlook is not rosy, neither for the USA nor for Europe and certainly not for Germany. A stronger economic slump in the coming months or in the coming year is very likely. We still consider the US market to be more attractive because it offers the better risk-reward ratio in our view. US companies are now starting to pay more attention to costs and, for example, to reduce staff, which could offer opportunities for some stocks. Europe, on the other hand, is lagging behind on the cost-cutting issue, so we remain cautious on the German and European equity markets.

In the European energy crisis, the (too) warm late autumn recently provided short-term relief. On a one-year horizon, however, the situation could worsen, as it is likely to become much more difficult to fill gas storage facilities in the coming year, for example. The winter of 2023/24 is therefore likely to be more problematic than the winter of 2022/23. Major improvements in gas and electricity supply are not to be expected in Germany over the next few years. We expect that more energy could be available in Germany and Europe in about four years at the earliest - for example through the expansion of renewable energies and new energy partnerships. Some energy-intensive companies could therefore leave Germany or increasingly cut jobs. Unemployment will increase in Europe but also in the US - the big tech companies have already started layoffs and hiring freezes.

On a sector level, companies in the renewable energy segment offer opportunities in our view. This is because the number of permits for projects to expand renewable energies is likely to rise sharply soon. On the equity side, we continue to believe that a focus on high-quality companies with high pricing power makes sense, as these can generate solid profits even in a weak growth environment and thus probably offer the best investment alternative in the long term.

China remains a difficult investment region to assess. However, the interest rate differential with the US has shifted and therefore China should benefit from lower interest rates with a certain time lag. Should China open up the economy more in 2023 and thus end the zero-covid strategy, the economy and stock market in the Middle Kingdom could surprise. In addition, China should continue to stimulate the real estate and especially the infrastructure sector. The expansion of infrastructure should support the commodity sector in particular.



    • US inflation data surprisingly positive recently
    • Pressure on central banks remains high
    • German government bonds remain unattractive
    • Selected corporate bonds offer good opportunities

The latest inflation data from the USA were a positive surprise. US inflation will probably continue to decline in the coming months, but the pressure on central banks to raise interest rates further and to continue to be restrictive for the time being is likely to remain high. Many central bankers seem to be afraid of losing their reputation if they do too little, i.e. do not raise interest rates in time. This pressure to do more will probably also increase at the European Central Bank, because structurally inflation in Europe is likely to remain at a higher level than in the US.

Investor sentiment for bonds remains very negative. In fixed-income securities, we still consider German government bonds unattractive. In contrast, selected high-quality corporate bonds continue to offer opportunities in our view. Issues that currently yield up to 5% or more are particularly attractive.


Market technique (sentiment)

    • Still positive
    • Liquidity high
    • High pessimism on the markets

From a market perspective, the markets continue to receive support. Pessimism in the financial markets remains high and fund managers' cash balances are at a very high level.


Currencies/Basic Resources/Gold

    • Euro continues to be burdened in the longer term
    • Short-term euro recovery possible
    • Gold could recover

In the short term, a euro recovery is still possible. In the longer term, however, the euro is likely to remain under pressure from developments in Europe and especially in Germany due to the energy price problem and the expected weak development of the German and European trade balance. Should Ukraine and Russia sit down at the negotiating table, however, the easing geopolitical pressure would support the euro. And, if the ECB were to raise interest rates more than expected, this would also have a positive impact on the euro. Investor sentiment and market technical data point to some recovery in gold.


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