MONTHLY RECAP: BEST OF APRIL 2022

Now that May is in full bloom, let's recap and see how market news developed on the week-to-week basis last month.?

WEEK 1 (04/04 - 10/04)

EUROPE: NEW SANCTIONS AGAINST RUSSIA SEND MARKETS ON A DOWNWARD SLIDE

On Tuesday, the EU Commission announced that it is planning new sanctions against Russia. This includes an import ban on coal; should the EU enforce this, it would be the first energy import ban against Russia. But also other products, such as cement, wood and seafood are under discussion.

In addition, port closures are being discussed.Russian ships would then no longer be allowed to use European ports. The same applies to Russian trucks; they would be denied entry. The stock market reacted negatively to the proposed sanctions package, as investors expect significant restrictions and negative consequences for the economy if the sanctions are being implemented. Negative consequences can be higher than usual construction costs or energy prices.?

However, nothing has been finally decided yet, as all 27 EU member states have to vote on the planned measures first. So you can see that news about sanctions proposals alone can influence the market already and it doesn't require any set resolutions.

WEEK 2 (11/04 - 17/04)

GERMANY: GROWTH FORECAST LOWERED AND THE IMPACT OF GAS SUPPLY FREEZE

The leading economic institutes are unanimous in their opinion that Germany's gross domestic product (all services rendered and products manufactured domestically) will grow instead of 4.8% only by 2.7%. However, this can be considered a "shift" to the next year, as the forecast for 2023 has been increased. You probably already guessed it: the reason for the lowered GDP estimate is the war in Ukraine and the Corona pandemic. In addition, inflation has its fingers in the pie again: due to high prices, we can buy less from our salary and thus do not contribute to a stronger economy.?

?Did this analysis take into account the fact that Germany might stop buying gas from Russia? No. Perhaps you still know the so-called "scenario analysis" from school or university. The economic performance of 2.7% represents the base scenario (i.e. neither a good nor a bad development). This includes the fact that Germany will continue to receive gas from Russia. If Germany were to stop receiving gas from Russia in the future, this would have a negative impact on the calculation and a total of EUR 220 billion in economic output could be lost. The gross domestic product would then only grow by 1.9%. So you can see that the German economy is suffering under the current circumstances.

When this news was published yesterday, the DAX temporarily sank below the 14,000 point mark, as investors had apparently taken a more positive view of the German economic development. If you are invested in the DAX yourself, you should have noticed the decline yesterday in your Portfolio.

WEEK 3 (18/04 - 24/04)

USA: WILL AMAZON SOON ENTER THE NFT BUSINESS?

Andy Jassy, the CEO of Amazon, can certainly imagine offering NFTs for sale on Amazon. In a conversation with the US business channel, Jassy reveals that he himself does not own Bitcoins or NFTs. However, he considers both the cryptocurrency market and the NFT business to be fast-growing areas and does not want to miss the trend. However, he denies the rumor that Amazon will soon offer cryptocurrencies as a means of payment.?

Now you might be wondering what exactly NFTs are. You've heard the word many times in the past weeks and months, but still haven't quite figured it out? NFT stands for "Non-fungible token" and is something unique that cannot be exchanged.? It can be anything that is digital; for example, pictures, music, or even art. The NFT gives you ownership of the digital artwork, for example. You can imagine it like this: Anyone can buy a copy of the Mona Lisa, but there is only one original and it hangs in the Louvre. Until now, there was no real way to have sole ownership of digital works. For example, a digital work of art could simply be sent from person A to person B. Just as with a photograph, both then owned it. Owning the NFT, however, guarantees that you have the rights to the work, can sell it, and thus participate in its potential value development.?

The reasons why people buy NFTs are manifold. Some like the art, for others a particular piece of music has a high sentimental value, and others buy NFTs for speculative reasons. By the way, NFTs are stored in a wallet, just like other cryptocurrencies, for which the wallet must be NFT-compatible.

By the way, NFTs are often used for portfolio diversification, similar to Bitcoins. Have you ever thought about adding NFTs to your existing portfolio? At least now you know what this is all about.

WEEK 4 (25/04 - 01/05)

USA: MUSK TAKES OVER TWITTER

You probably heard a few weeks ago that Elon Musk had bought 9% of the shares in the short message service Twitter. At the beginning of this week, it became known that the Tesla boss wants to buy the entire company for USD 44 billion. According to Musk himself, freedom of expression is particularly important to the news service and he wants to expand and protect it. The result of Musk's takeover, by the way, would be that Twitter would disappear completely from the stock market and would thus once again be in private hands, as it was before the IPO.?

But how does the takeover process actually work for shareholders now? Musk needs 50% of the shares in Twitter to gain an absolute majority in the company. Unlike Facebook (Meta) or Google, for example, Twitter's founders and top managers do not have separate voting rights that guarantee them control over Twitter. Musk has offered a price of USD 54.20 per share and not all parties agree with this offer, according to an insider. Especially the long-term investors and ETF providers, were hoping for a higher price beyond USD 60. On the other hand, short-term investors (e.g. hedge funds) consider the price to be fair and would accept the offer.?

By the way, the price of USD 54.20 was negotiated between Twitter's corporate management and Musk. You may wonder why the share price is currently below the proposed USD 54.20 price. This reflects the uncertainty of investors as to whether this deal will go through. Because ultimately, it is now in the hands of shareholders to approve this price or not. It is said that Musk has already made phone calls to major shareholders in order to convince them.?

If you hold Twitter shares yourself, you will probably receive a message from your broker or bank asking you to either accept or reject the USD 54.20 offer. In case you agree to the offer, your bank or broker will most likely lock your Twitter stock so that you don't sell the position by mistake. If you do not have the agreed number of shares on the closing date, you are in breach of contract and your bank or broker wants to protect you from this. If you do not agree to the takeover offer, you keep your shares for the time being. Further steps may then be taken, but this depends on the proportion of shareholders who have agreed to the offer.

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