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November 26, 2021 – This morning the markets reacted as expected to the news of a new Corona variant in South Africa. Even though nothing has changed on the market and yesterday’s figures were still very positive, today the markets are cashing in on headlines and mindless statements. The outlook for China in particular is surprisingly positive.

"Think first, then fire" - Markets react as expected to news on new virus variant
“Think first, then fire” – Markets react as expected to news on new virus variant

Markets react as expected to news on new virus variant

As soon as a new Corona variant rears its ugly head, the markets react in a predictable, supposedly panic-stricken manner. Profits are realised on the stock markets. The numbers drop slightly, it is possible to buy cheaper for a while, the stock market prices rise again and the profit-making game starts all over again.

Financial press willingly drives the worry

This morning, the financial press is outdoing itself in this respect with negative headlines promoting circulation. Even bank managers in strategic positions are being quoted, calling on people to stop thinking objectively. But wouldn’t now be the time to “ask first and shoot later”?

Our loyal readers know that we like to look behind the scenes and look at the sober figures.

The price journey of the nickel markets as a practical example

Let’s just take nickel as an example. While it was still at around $20,400 per tonne on the LME in mid-September, it had plummeted to just under $18,000 at the beginning of October 2021 and had already risen again to over $21,000 on 20 October. Yesterday, on 25 November, nickel broke through $21,000 again. This morning we are moving at around $20,000. Because of a Corona variants report.

SHFE nickel price up 14.5% since end of 2020

On the SHFE, nickel is not looking very different. Compared to the beginning of November 2021, the nickel price is still up by more than 5%. Compared to January 2021, it is even up 14.5%. On the LME it is even more extreme. There, nickel prices has climbed by over 21% since January 2021.

Prices for nickel in 2021 clearly up

The market for nickel is thus clearly up. The current reports on nickel also show that nothing has changed here. Nickel is scarce and in great demand. Today’s nickel inventories from the Shanghai Bonded Area alone show this. The nickel briquette inventory continues to go sharply downwards. And compared to December 2020, Shanghai nickel inventories are down about 57%.

Brussels has nothing more than pithy words

In all likelihood, the current Corona variants report, which is now also already being supplemented with substantive empty but pithy words from Brussels, should also lead to prices sorting themselves out and then rising again.

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Ursula von der Leyen: “The @EU_Commission will propose, in close coordination with Member States, to activate the emergency brake to stop air travel from the southern African region due to the variant of concern B.1.1.529.”

“If you don’t perform with deeds, you have to shine with pithy words”

“If you don’t perform with deeds, you have to shine with pithy words.” Our CEO Thorsten Gerber criticised Ms von der Leyen’s Tweet on Twitter with this statement. “Unfortunately, such people rarely think about the negative impact of their words. Even if they are just smoke and mirrors.”

China: Positive signals from the People’s Republic

Deutsche Bank forecasts economic growth of more than 7% for the People’s Republic of China in 2021 and also sees positive signals for 2022.

General conditions on the capital market are improving

Especially the framework conditions for the Chinese capital markets would be improved by political measures. Head of state Xi Jinping has announced that he will run for a new term at the head of the Communist Party in October 2022. Beijing’s interest in an economic recovery in the course of the coming year could thus increase further.

157 billion US-dollars for green energy development

For example, the strict restrictions on the granting of real estate loans have been eased again somewhat, according to Deutsche Bank. In addition, the Chinese central bank has launched a credit programme worth the equivalent of 157 billion US dollars to finance green technologies, which is to start at the beginning of 2022 and promote, for example, the expansion of renewable energies and CO2 storage technologies.

This means that the opportunities for China in the medium term look much better than is generally postulated.

Daimler also sees China as a “super market” for 2022

The Daimler Group, which now generates about 1/3 of its revenue in China, also looks back on strong growth in 2020 and also in 2021. Especially in the field of electric driving, the demand for Mercedes-produced e-cars is high, Hubertus Troska said, even though the competition in low-priced Chinese electric vehicles is strong. However, as China is the world’s largest automotive market, Daimler continues to see immense growth potential there. Also in the field of classic combustion engines. A “super market” for 2022.

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