The gold price is unstoppable. There are currently many reasons why precious metals are attractive to investors as a stable investment. .
Successful debut for the new Credit SuisseChief Thomas Gottstein: The major Swiss bank increased its profit in the first quarter of 2020 by 75 percent to CHF 1.3 billion, as announced on Thursday. The institute exceeded analyst expectations and achieved the best quarterly result in the past five years. In addition to significantly increasing income from bond and equity trading, proceeds from the sale of a fund platform and a negative tax rate also provided a boost.
“The first quarter under my leadership as the Group’s CEO was characterized by a very difficult environment with drastic effects from the COVID-19 pandemic,” said Gottstein. “Our asset management business model once again proved to be resilient.” However, dark clouds are increasingly emerging. In the coming quarters, the bank may need to build additional reserves and make allowances, the release said. The recovery in advisory and issuing fees could also be subdued.
In the first quarter, Credit Suisse increased loan provisions to CHF 568 million (previous year: CHF 81 million). Previously, major US banks had deferred billions in bad loans due to the economic stalemate, sharply falling oil prices and millions of unemployed, and had plummeted profits in return.
Credit card business charged
In the downturn, the banks are struggling with the consumer credit and credit card business, which they expanded during boom times. But neither Credit Suisse nor the arch rival are in this business UBS strongly committed. Both focus primarily on wealthy private customers and investment banking. Credit Suisse is the first major European bank to close a deal since the pandemic broke out.
Thanks to the turmoil on the stock exchanges, income from bond trading rose by 26 percent in the first quarter, while the institute increased its share trading by 24 percent. The Deutsche Bank, which wants to present its quarterly balance sheet on April 29, can no longer benefit from the stock trading boom. In the course of her corporate restructuring, which fell victim to 18,000 jobs, she had left the business.
Credit Suisse, on the other hand, has already completed the renovation under Gottstein’s predecessor Tidjane Thiam. The Ivorian had given up his position in connection with a shadowing affair in mid-February. The Gottstein, which is considered to be down-to-earth, is in many ways the alternative to its glamorous predecessor. The former investment banker set the first accent with a loan program from the Swiss banks for the medium-sized companies suffering from the corona crisis, in whose development he played a key role.
More: UBS and Credit Suisse only pay half of their dividend later because of Corona.
new York A US lawsuit accuses ten of the world’s largest banks of manipulating the corporate bond market. According to this, the money houses – including Deutsche Bank – have been asking for high prices for almost 14 years, as can be seen from court documents on Tuesday. As a result, investors were financially damaged.
The accused financial institutions include JPMorgan Chase, Bank of AmericaBarclays Citigroup, Credit SuisseDeutsche Bank Goldman Sachs, Morgan Stanley, Royal Bank of Scotland and Wells Fargo. Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs and Wells Fargo declined to comment.
More: Ex-top manager of Deutsche Bank sentenced to prison.
Frankfurt, San Francisco The corona virus didn’t stop at Jeff Bezos either. When the stock markets crashed worldwide in spring, the founder of the e-commerce giant Amazon felt this. At times, the American’s fortune fell by $ 7 billion in one day alone. About a month later, nothing more can be seen.
Read on now
Get access to this and every other article in the
Web and in our app for 4 weeks for free.
Read on now
Get access to this and every other article in the
Web and in our app for 4 weeks for free.
Frankfurt At the end of the week, many investors have regained their courage after there have been some hopeful reports in the fight against the corona virus.
Even if a drug to treat Covid-19 was found quickly, the way back to normality would be a long and rocky one, said portfolio manager Thomas Altmann from the investment advisor QC Partners. “The consequences of the economic lockdown at company level and the rise in the unemployment rate cannot simply be reversed.”
Timo Emden from the analytical company of the same name said something similar. “Investors are longing for the big hit in the corona pandemic,” he said. For the market, however, it is still clear that even an active ingredient is not a panacea for the affected global economy.
The German Leading index Dax climbed to 10,756 points on Friday. By the close of trading, however, he surrendered part of the profits and closed with a gain of almost 3.4 percent at 10,642 points. The development of the EuroStoxx 50 is similar: the European stock market index went out of trading with an increase of 2.7 percent at 2,888 points. In the US, investors were also initially in good spirits on Friday. The Dow Jones ended the year up 2.9 percent at 24,216 points.
Badly hit global economy
Jochen Stanzl, chief market analyst of the broker CMC Markets, compared the current increases in the stock market indices with the situation before the big sell-off in December and January. “Even now soaring technology stocks are driving like Netflix, Amazon and Tesla attention away from the fact that the real economy is in ruins, ”he said. “In the end, these companies will do good business, but they won’t save the global economy.”
Despite all the euphoria, the companies are “facing a major adjustment process, accelerated by the additional costs and burdens from the lockdown,” says Stanzl. At the moment, no one could say what the size of company closures would be in the end and how long it would keep stock exchanges from reaching the old highs.
In view of the relaxation of the contact restrictions, Jörg Krämer, chief economist at Commerzbankthat the economy will pick up strongly in the short term. “In the long term, however, there are considerable dangers – for example, due to the sharply increasing corporate debts caused by the crisis,” he said. A V-shaped upturn, i.e. a very rapid pickup in the economy, is unlikely. Rather, a gradual return to growth can be expected.
In the coming week, the developments around the corona virus and current figures on the economic situation will continue to be the dominant topics on the markets. For example, stock marketers are eagerly awaiting the EU’s virus crisis summit next Thursday. Among other things, there will be a possible inclusion of jointly guaranteed debts to overcome the pandemic consequences.
In addition, shareholders will increasingly look at the quarterly figures of individual companies in the coming week. After companies in other countries have already submitted figures for the first quarter, the balance sheet season is now also beginning in Germany. The kick-off is as usual SAP.
In the current balance sheet season, a total slump in profits of 40 percent can be expected, said Ulrich Stephan, chief investment strategist for private and corporate customers at German bank. Nevertheless, he is optimistic: thanks to the multi-billion dollar aid packages from central banks and governments, investors are looking beyond current developments and are concentrating on profits in the second half of the year and 2021.
Entry into the stock market
Given the current price gains, some investors are wondering whether they have already missed the best opportunity to enter stocks. According to the DZ Bank analysts, the volatility will remain high for the time being due to the continuing uncertainties caused by the corona virus and further price setbacks cannot be ruled out. “From previous stock market cycles, we know that after a recession has bottomed out, the stock market has the highest and most sustained growth rates,” said DZ-Bank. “It will take some time before this low is reached. Our economists see this so far in the second quarter of 2020. “
Looking ahead to the coming years, the DZ Bank analysts expect: “By 2022/23, the Dax companies could earn as much again as in the previous record year 2018, and the Dax could reach its highest level again in 13,800 points in 2024.” Who in the continue to buy shares in the coming quarters, should achieve very good long-term investment results. However, it is important to only have shares in companies in the portfolio whose prospects are viewed positively over a three or five year period.
Altmaier wants to gradually ramp up the economy
This is how it will continue in the coming week:
Monday: At the beginning of the week, quarterly figures of Philips, Vivendi, and IBM expected. In Japan, figures on foreign trade are published in March, in Germany data on producer prices in March. The Bundesbank also publishes its monthly report.
Tuesday: The balance sheet season starts and SAP starts as usual. However, the software company had already published preliminary results in early April and lowered the full-year targets. In addition, Netflix, London Stock Exchange (LSE) and Coke Numbers before. The ZEW index provides information on the mood of German stock exchange professionals. UK unemployment figures come from London.
Thursday: The publication of the GfK index will give an indication of the Germans’ buying mood. Alexander Roose, chief equity investor at asset manager Degroof Petercam, expects consumer confidence to “be severely impacted by the severe recession in the services sector due to rising health care costs and lower purchasing power”. In addition, the preliminary Markit purchasing manager index for the euro zone (industry, service, composite) is published. In the United States, the number of initial jobless claims for the week ending April 18 is published. Among other things, they provide insights into their books Credit Suisse, Volvo, Renault, Unilever and Intel.
Friday: At the end of the week, the Ifo index is on the schedule. It provides information about the mood on the German executive floors. Experts expect another slide to 77.2 points from 86.1 points in the previous month. In the United States, data on orders for durable US goods are also published. Experts expect a drop of 11.4 percent. Quarterly figures come from Sanofi, American Express and Nestle.
More: Yield in Corona times: With which investments you can still earn money
Berlin, Dusseldorf, Istanbul, Cape Town, Vienna In the beginning, it was the emerging Asian countries that suffered a corona shock – infected by China. In the meantime, however, the virus has infected the economy in emerging countries worldwide, including in Eastern Europe.
In Romania, for example, the pandemic abruptly ended the boom of the past few years. One million people are unemployed and another 950,000 are in employment. In March alone, economic output in south-east Europe, the largest country with 19 million inhabitants, fell by 30 percent.
In Turkey, on the other hand, a country that was just starting to work its way out of a phase of weakness, every third car supplier has stopped operating since the beginning of the year, reports Alper Kanca, President of the Taysad industry association. The Turkish companies are closely involved in the European supply chains.
75 percent of all exports go to Europe. “If the plants there remain closed, we cannot produce here either,” says Kanca. The same applies to tourism: the vast majority of guests in Turkey come from European countries.
Whether Romania, Turkey, Russia, Indonesia, Egypt or South Africa, Brazil or Mexico: the economies emerging in the wake of the billion-dollar states of China and India are threatened by the pandemic to be pushed back into poverty.
Lack of demand from the industrialized countries
Because the virus finds a much broader target in emerging countries than in rich industrialized countries: The economy not only suffers from exit restrictions, but also as a pre-supplier from the lack of demand from the industrialized countries. And, as in previous crises, foreign investors are fearful and are massively withdrawing capital.
The consequences are drastic: local currencies plunge against the global currency, which means that national budgets can no longer shoulder their foreign debts and companies can shoulder their foreign currency loans. The economy is slumping longer and longer – and the more it is based on raw material exports, for example in Russia.
There is another drama in the corona crisis: the healthcare system is even less resistant to the virus than in Italy, Spain and France, the hard-hit countries of Western Europe. In Romania, for example: “The health system is going through difficult times due to its poor management, the brain drain and the worst financing in an EU comparison”, says analyst Radu Magdin from Bucharest.
The situation in the hospitals is still under control. “But if there were a strong increase in infections, the exposure limit would be reached quickly,” says Martin Sieg, head of the Konrad Adenauer Foundation in Bucharest. The number of migrated doctors is said to be 20,000. There are also no caregivers in old people’s homes.
The government under the conservative Prime Minister Ludovic Orban therefore banned the emergency decree that Germany and Austria bring medical and social workers by plane. Medical personnel may no longer terminate for the duration of the emergency.
Health care on the borders
Healthcare is also reaching its limits in Ukraine. More and more doctors and nurses have to look after their colleagues in hospital: 784 medical staff are infected with the virus, including 100 new cases since Wednesday alone.
This is a high proportion in 4,161 corona cases in the country. Ukraine and other poorer emerging economies cannot compete when rich Gulf and industrialized countries buy respiratory masks and other medical supplies in China at horrific prices.
The Vienna Institute for International Economic Comparisons expects the recession in Eastern Europe to become deeper than during the financial crisis. For many emerging economies, the now waning influx of capital from abroad means that they will not be able to continue to finance their large current account deficits. “We expect that many countries will use multilateral support in the coming months,” says economist Elina Ribakova from the Institute of International Finance (IIF), a lobby organization for financial institutions.
Growing debt is driving many countries to the brink of state bankruptcy, which Lebanon and Argentina have already passed. The International Monetary Fund (IMF) had to switch to emergency operations in March: it plans to use all of its trillion dollars in the crisis. “We have to answer an unprecedented number of emergency calls,” says IMF chief Kristalina Georgiewa. The $ 50 billion emergency program has been doubled.
More than 100 emerging and developing countries have applied for aid from the IMF in the past two months. According to the IMF, international investors have already withdrawn $ 100 billion from emerging and developing countries since the beginning of the year – more than during the Asian crisis of the 1990s and the financial crisis of 2008/2009.
The spring meeting of the IMF and World Bank, at which finance ministers and central bank heads as well as development ministers from 189 countries discussed the world economy, turned into a world crisis meeting via video conferencing – this is also due to the virus.
For the poorest 25 developing countries, the richest 20 countries (G20) agreed on Wednesday to defer interest and repay bilateral government debt by the end of this year. “That won’t be enough,” said Georgiewa. It demands longer debt moratoriums and grants to poor countries to help them overcome the recession.
During the spring conference, she and the World Bank chief David Malpass made several appeals to the G20, but please – as in the financial crisis – develop a joint program for the recovery of the global economy. An appeal that largely died away.
“The crisis in the emerging countries is just beginning,” says Sergei Gurijew, professor at the Paris SciencesPo and former chief economist at the EBRD in Eastern Europe.
One country in crisis pulls the next. In Asia, for example, the economy will not grow in 2020 for the first time in 60 years, the IMF stated on Easter Tuesday in its economic forecast. Like Latin America, Eastern Europe is therefore facing a 5.2 percent drop in economic output. South Africa must expect economic output to shrink by 5.8 percent.
The Turkish economist Ali Agaoglu now expects that Turkey will still have to ask for help from the IMF, even if President Recep Tayyip Erdogan still rules it out. In any case, the government’s rescue program will not be enough to get the economy going again, he believes.
Hardly any emerging country is as badly prepared for the corona pandemic as South Africa. “The government has wasted so much money and driven so many investors out of the country in the past ten years that the state treasury is empty and the scope for fiscal stimuli is correspondingly small,” says Frans Cronje, head of the independent think tank “Institute of Race Relations.” “.
The five-week curfew imposed until the end of April will have an impact primarily on small and medium-sized companies. But they are South Africa’s job engine. “Hundreds, if not thousands, of small businesses will go bankrupt with devastating consequences for the labor market,” feared business consultant Dirk de Vos.
The virus is already hitting a country with record unemployment of 30 percent and zero growth. Some observers now expect unemployment to rise to 50 percent – a drama from which the country will hardly be able to recover quickly.
Experts are most likely to hope for a reasonably quick recovery for Eastern Europe. The countries could benefit from a relocation of factories of European companies from Asia, said the managing director of the East Committee of the German economy, Michael Harms.
Because: “These countries are very competitive.” Romania, Serbia, North Macedonia, Belarus and Ukraine could be winners of a withdrawal from Asia, said Harms. For Ukraine, however, this only applies if it can escape state bankruptcy with the help of the IMF.