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Germany: Europe’s Industrial Engine or Structural Drag? (WOLF EU)
Recorded: March 10, 2026 Duration: 1:05:12Space Recording
Full Transcription
Thank you. Good afternoon, everyone. Welcome back to the WolfEU show. My name is Ivo. I'm your
host, Ivo Tronik, and I have my lovely co-host as always, who's slightly looking different
today, Alex Tutik.
Yeah, good morning. I thought it would be a little funny play on words. So now I'm a tick.
Get it. Tick for a trade. I'm joking. So today we are joined by our lovely guests today.
Have a whole host of exciting perspectives and views and probably some familiar names as well in the crowd um on the german markets i'm just inviting a few more people up here on stage have might be a few technical issues that if we do get any technical issues for whatever reason
i'm just going to restart the show but we should be good all the invites are going out here
um what are you looking for uh today what excites you about the German market, Alex?
Well, right now I'm looking a little bit what's happening with the yields because they spiked with the oil situation and that can signal a few things. It can potentially maybe signal some
weakness and then I'm looking a little bit what's going on in the car sector, what's going on with car sales and sort of what would be potential future choices moving forward from
2025. What was the transition a little bit for Germany? You could put it that way where
it was more defense and tech that performed.
And yeah, I guess we are going to find out this show what the trends are going to be for 2026 and moving forward.
Yeah, some exciting stuff, definitely.
I think Germany is definitely very known for their cars.
So if you're a big fan of your BMWs, your Mercedes,
definitely tune in for that.
I'd like to pass the mic around.
We've got a few new faces I would love to introduce here up on stage.
First up, I would love to invite is Tiltfolio.
Welcome to WolfEU, if you want to give yourself a little intro and kind of what you do.
Hi, Eva.
Yeah, thank you for the invite.
So just by introduction, Tiltfolio is a trend following system. And that just basically means that the system is allocating towards whatever asset class is doing well, based on, you know, kind of mathematical performance.
And I'm excited to be here on this show relating to Germany.
I think I'll kind of pause my introduction there and I'll let everyone else kind of introduce themselves.
And then I'm looking actually forward to getting into the broader discussion of how Germany could be a great opportunity going forward.
Fantastic. I love that intro.
Always great to meet some new faces here in the crowd with very different perspectives as well and different styles of investing as well.
We always welcome that. And next up, I would love to invite here on stage is Investobi. Welcome.
Yeah. Hello, everyone. Thank you very much for the invitation.
I'm really glad to be on here and I'm really looking forward to your opinion on the German markets because
I myself would call myself a value investor. I'm from Germany. I'm in Germany right now and I'm
living here and I have my own perspective. So I'm very excited to get to know your views.
Awesome. Yeah, we'd love to also hear your experiences as well as an investor and
kind of what you see in the market there soon and of course I have a few familiar friends with us
top secret how's it going welcome back. Wonderful good evening from Taiwan thanks Eva for
the invitation and I'm excited to talk about the German market today.
Awesome. Always lovely to hear from our German listeners as well.
And yeah, please do feel free to like and share if you want to come back and revisit this space as well.
And especially if you have any questions, do pop them down below for our guests because we'd love to hear what the audience would like to know as well.
And of course, Mads, welcome back as always.
How's it going for you?
Oh, you are dropped as illicit with technical issues.
If you are struggling to get back on stage, you might need to drop and come back on the phone.
Oh, are you there? Mads?
Hello? Can't hear you there? Mads? Hello?
Can't hear you.
Or is it just me?
No audio, right?
Or is it just my phone?
I don't know.
No, we can't go.
Oh, I just seen him have the mic.
Maybe it's like an internet issue.
Mads, are you there with us?
No, I think he's having some technical issues.
So I'm just going to see.
It might be best if you drop off and then completely rejoin the space again.
Okay.
Yeah, this can be super sensitive with syncing.
Yeah, it can be a bit glitchy sometimes, which can be a bit annoying.
But do bear with us.
And of course, we have our friends over at
Leverage Share. Sandeep, always a pleasure to have you back. Hello, hello everybody. Germany is
definitely an interesting case to study. Many German employers are reporting up to 27%
vacancies in their employ and traditional markets such traditional sectors
such as manufacturing have been a big laggard and there's currently being a drag on the
eurozone which is now actually ironically enough being lifted by Poland some of some
of the newer players countries that joined the eurozone after the fall of the iron curtain so it's an interesting market
to study let's get into it awesome yeah for sure i would definitely get into that hopefully i can
get mads back up in here um just a very very quick legal disclaimer i have to read here is nothing we
share on this space is professional financial advice this is purely for educational purposes
to help you and the audience learn and
do your own research. As an investor, you should always carefully consider a fund's investment
objective, risks, charges and expenses before investing. A fund's prospectus summary. Prospectus
contains all this information, especially from income shares, ETPs, from leverage shares or
whichever fund you decide to choose. And obtain a funds prospectus and key information
documents especially here in the eu visit their website at incomeshares.com and a funds prospectus
and key information documents should be read carefully before investing as always um yeah so
sandeep i would love for you to give us a little bit of a backdrop about the german markets obviously
the listeners here are very new and some of them have
been maybe long-term investing and just see what's been happening. We'd love for you to paint that
perspective for us. So yeah, the Eurozone, well, specifically Germany's position in the Eurozone
is under a state of erosion, primarily because traditional manufacturing is no longer cost effective in a globalized
landscape.
Essentially, because the euro is so damn high compared to certain other currencies, the
unit cost of manufacturing is so much higher, which means that even after paying for import
duties, it's better to basically buy from abroad.
So this is what's plaguing essentially large large sectors
within the manufacturing industry within Germany uh they cannot keep raising the salaries for their
workforce uh while dealing with things like inflation and so forth which is why traditional
manufacturing is reporting something like 27 of all all firms in manufacturing are reporting
vacancies and they're saying that it's uh year on year it's been more and more difficult to find uh
workers essentially so on top of that uh energy intensive sectors just chemicals or maybe
aluminium for example are also facing high input costs because Germany decided to lean towards the greener energies as rather
than nuclear energy which they did have so as a result you know green energy again not a bad idea
uh but uh there isn't nearly enough green energy being generated in Germany to do this and there
is a seasonality factor for example in winters I don't think your solar cells work so well for example so high electricity costs were almost immediately imputed uh so they're now
firing up coal fired they're now restarting their coal-fired plants now and I've been using it for
a while now uh so uh so much for green energy initiatives on that part on top of that uh
legacy automotive such as
Volkswagen, for example.
Now, Volkswagen is doing actually quite well,
but one reason why it is able
to do so well is because
it has a series of partnerships with
state-owned manufacture car
makers in China who help them
sort of make components cheaper,
especially at the lower end of the
vehicle budget so cheaper
cars are being made uh cheaper car parts are being made by an ecosystem of Chinese suppliers and
they're able to use that this is why you see German car makers are arguing specifically German
automotive lobbies are arguing the tariffs on EVs should be reduced.
They're telling that Germany should reduce tariffs on EVs
primarily because they intend to import their own EVs
from their Chinese factories into Germany
because they realize that high cost of labor,
high input cost, sorry, high cost of labor
which would be required to attract more workers
to join in within Europe europe plus a high input
cost plus high taxes plus numerous clearances environmental crisis required for expanding any
particular factory or so forth basically means that the cost of manufacturing very cheap cars
is not very cheap which means that they they will always fail to compete which is why you see byd making
such huge sense i think we discussed this a little bit in a previous uh wolf financial session that
that's why byd is sort of being able to is able to enter a byd a cheap byd is about 20 000 pounds
or euros uh the cheapest mercedes vw uh vw is around 25 30 because it does a lot of these Chinese, has this China-sourced parts
coming into its vehicle catalog.
But even then, they're up 25-30, whereas Mercedes and BMW goes up to 40 and 50, at least.
So you can't compete when there's a much bigger and much cheaper manufacturing base
being given such massive access to the market.
And Germany is sort of losing out on that fact because of that interesting so just to uh for the listeners so you know the dax or the sector breakdown uh for the german markets automobile
is made up around 20 sorry 10 ish so obviously your volkswagen bmw mercedes and porsche as well
and that we've mentioned there.
So yeah, very interesting facts there.
Alex, what do you think about that?
I know you mentioned you wanted to speak on some of the automotive stuff.
No, I think Sandeep covered that pretty good, yeah.
It's going to be interesting to see how the European car manufacturing
is going to handle the competition with countries like China.
So especially with, you know, I think it was BYD
who built a European office in Budapest.
So they're coming this way pretty fast.
Yeah, certainly a fast-growing company to give the market an edge
for their competition there.
Mads, are you back with us?
Welcome back.
Yeah, little technical problems.
I run a tech fund, but I can't figure out my telephone.
That's just how it is.
Amazing.
Always the way.
Yep, I look forward to hearing your views as well on the market here.
Top secret, I know you're German yourself.
You grew up there.
What was it like for you investing in German markets?
And what do you think about the automotive markets here as well?
Yeah, I was born in Stuttgartuttgart actually where Porsche and Mercedes come from.
And but what I observe over the last years is that a major drag on the economy in Germany is clearly the
automotive sector, which is or which was a key pillar of the German manufacturing and exports, of course, and the German automakers, all of them face significant hurdles in 2026.
And I identified three of them,
which is first slow transition to electric vehicles,
second high production, labor and energy costs over capacity, for example,
declining profitability, of course course and supply chain issues and the last one is resulting restructuring there have
been massive job cuts being announced across the industry with suppliers also
reducing investments in Germany and shifting abroad and a good example is
Volkswagen like today Volkswagen released data about 2025 and it's it's it clearly doesn't look good
like profit fell from 12.4 billion to 6.9 billion and operating profit dropped by
54 44 percent and revenue declined also by 0.8% just to under 322 billion and across all brands
the Volkswagen Group sold almost 9 million cars which is 0.5% fewer than the previous year and
also the dividend is expected to be 17% below the previous year's figure.
And yeah, what were the reasons for that?
The company said today that US tariffs and problems at its subsidiarity Porsche
are reasons for the poor results and also Porsche is not doing well,
which is really dramatic in my point of view. Porsche anticipates a dramatic drop in profits for 2025 and also we have to expect dividend cuts of course. worst result in 10 years and the company now plans further cutting cost measures around 50 000 jobs
are to be eliminated in germany by 2030 and that's really um yeah it's really it's it doesn't sound
good actually no that's very interesting because i i don't see a shortage of porsches around my
area it seems but certainly it's hitting the figures.
Maz, I see your hand up there. Go for it.
Yeah, so talking about car industry, I think the problem is that building cars is really about manufacturing and doing that efficiently.
that efficiently. But in every sort of car company's life cycle, they get to a point where
they have a brand and where they can actually make a really good business by building cars
that is more than good enough, that is luxury cars. They do that with a high margin. And it's a story that Clayton Christensen, the
American economist, told so beautifully, where he talked about how Toyota came into the American
market. Their first car, I think it was called a Corona, and it was really a shitty car.
But it was low-end, and it was not really good, but it was a cheap car,
and it could get you from A to B, and you could have something in the trunk as well.
So it did the job for a lot of people.
And then the American car makers, they sort of looked at this and said, nah, we don't want to compete with that. We want to retrench at higher margin businesses, more expensive cars. And so we do them. And then we let Toyota do the Corona.
And then Toyota started building what they call Carina.
And they came up with better and better cars, more and more expensive cars.
So they grabbed the market from beneath.
And what the American car makers didn't realize was that they were losing volume.
So they were losing ability to produce cars cheaply. And suddenly Toyota came with
Rao, their four-wheel drive and their Lexus and stuff. And they were just better at producing cars
and the American car companies really suffered through Toyota.
And then Hyundai came and Kia came, etc. did the same thing.
So you need volume and you need to be able to manufacture at competitive prices.
And businesses, they tend to go for higher margin once they get mature and when their CEO is not a car enthusiast, but
maybe an economist looking at spreadsheets and wanting the best return on invested capital.
And I think the same thing has happened to the German car industry. Tesla is
phenomenally good at producing
cars. They have a whole new way
of producing cars
automated and with
a digital twin. And the same
goes for the Chinese
car producers. And the Germans
have not invested. They've just
kept building more and more expensive
cars going for the higher segment.
So I think they're really just out of business.
They're this legacy that cannot do anything, that cannot get back into the game.
And I think I read that the family behind Volkswagen, they wanted dividends.
They didn't want to invest more.
And I think they're totally correct about that
because I don't think that this can be a turnaround case.
I think it's a case where you just collect whatever you have,
which is left.
And yeah, so I'm pretty bearish uh on it and
and now they are yeah like it was said that germany is is expensive energy and expensive labor cost
not very automated and um and and china is is coming so they are also starting building in China and they're losing their its.
Once production is in China and is cheap in China, production is not in Germany and is not cheap in Germany anymore.
They lose the capability of producing cars efficiently.
And I think that's unwinding rapidly.
I think also the efficiency itself, I know, and also to set up shop with
such a large manufacturing base costs so much money. But also, I think besides also that,
I think obviously with inflation and the yields we mentioned and the interest rate has been so high,
it's become so expensive to borrow as well. I think also with the end of subsidiaries as well
and the EV transition challenges there,
I think that has a little mix to do with that
from what I've been reading as well.
So like an abrupt end for the generous EV purchase.
Remember when Tesla first came on the first scene,
it was very like, we'll give incentives and all this.
And then obviously it's kind of coming to an end
and it's diminishing a lot of the costs
consumed by these companies.
And obviously, the Chinese makers are just becoming cheaper, better, faster,
and more sort of luxury and feeling and quality as well in some of these cars I've seen.
Investor B, I see your hand up there. We love your take on this.
InvestorB, I see your hand up there. We'd love your take on this.
Yeah, I would like to mention that we maybe could divide between the new EV market and the old combustion engine market, right?
Because the Germans invented the combustion engine.
Yeah, we perfected it over decades.
We made it incredible and efficient.
And that made us very wealthy.
We created countless jobs and we earned a global reputation for that, right?
So, but now this market is, of course, kind of crumbling, but it's not only because of
the cheaper competition from China in the EV market, but I think it's mainly we are
the problem or even our politicians, because we see even more government interference in the market over time.
And we don't let the market decide when it's best to switch from the combustion engine to the EV market.
The prime example is a new mandate in Europe that by 2035 it's basically not allowed to sell any more new combustion engine cars in the European Union.
And this is basically the decision from politicians to cut off one of our economic lifelines and it's entirely possible that in the future we are going fully electric
it's without without a doubt maybe but it should be the decision of the market and not the decision
of some career politicians who have never worked in this private sector and for this reason, we are cutting our own lifelines and it really hurts to watch.
So and with that, our like BMW or Volkswagen, we're switching into the EV market because we are not allowed to produce in the future.
And with doing that, we're going into a market where we just can't compete with because of all these high prices
because we have so high tax um so many so high electricity costs like we can't compete in that
market but we have to because our politicians sent us that way you know what unfortunately with this
war i think our electric prices are about to go through the roof again unfortunately especially where i'm from uk here we pay the world's highest rates of electricity by wattage
by far if you look at the chart it's actually uh kind of alarming tilt folio i see your hand up
there we'd love to hear your taking perspective yeah thank you um before i i kind of give you
my more serious markets view uh since we're all talking about cars,
a year ago, I made the decision
to go against the grain and buy a diesel
because they became so cheap, right?
And I bought this cheap diesel.
It was like probably half the price
of any of the car.
And I have to say,
driving on the German Autobahn in a diesel
is a wonderful experience.
If you've never tried that before, try it.
And filling this car up, you know, I mean, in terms of, you know, feel like the rest of the art is really expensive.
But you fill this thing up and it has a range of 1,500 kilometers, you know, with all the range there.
And I'm looking at this thing and I'm like, this is so cheap to drive.
It's just amazing on the Autobahn. And as others have
said...
You're breaking up a little bit.
Oh, sorry.
As politicians have said...
Yeah, you sound
super far away.
Hold on.
Let me try again.
I do agree with driving on the German Autobahn.
It's fantastic.
That I do agree as well, I must say.
If you guys have ever driven there, it's pretty awesome.
Yeah, I mean, obviously, Volkswagen remaining the leading BEV brand in Germany.
Historically, 18 to 90% share in 2025,
four year ahead,
and Europe with a strong ID there.
So family performance for Volkswagen Group,
overall 26% EV market share in the early 2026
for Europe rankings.
Tiltfolio, are you back with us?
Is it better?
Yeah, exactly.
Sounds far, it's audible,
but we can still just about hear you.
Let me try again some other type of thing.
I just have some technical.
I'll try again.
No worries.
Yeah, Mads, did you have anything to touch on from that?
I have a... Now we're talking cars.
I like a stock called AT1 is the ticker.
It's Auto 1.
It's a pan-European used car sales company.
And they're building the Carvana business model.
Auto Hero, it's called. They have a signature truck where the truck is with
glass in the back so you can see the car being delivered. But it's the same business model as
the American business called Carvana, where you buy a car on the internet, basically.
you buy a car on the internet, basically.
So the business model is that you,
instead of the hassle with the used car salesman,
when you as a customer wants to buy or sell a used car,
you get a sharp price, a fair price.
And then they do the re...
Yeah, preparing the car for sale, they do that more efficiently than a usual traditional
used car sales person can.
So I really like that.
And it fell a lot here in January because there was a lot of snow and people don't buy
used cars when it snows. So the data was pretty poor. So it fell back a lot of snow and people don't buy used cars when it snows.
So the data was pretty poor.
So it fell back a lot.
So I think it's interesting.
Yeah, that's always nice to see a European version of Carvana.
So ticker symbol AG1 Auto 1 Group.
So very interesting.
Yeah, great for sharing that
thank you
anyone else who would like to share a few tickers
that they're interested in or looking at
yeah top secret go for it I know you always have some
very interesting names I love it
yeah thanks for the opportunity again
actually I want to go a little bit outside of the automotive market. And I thought about where is Germany strong? Where can they compete the most? And of course, defense tech is a big thing. I found really two interesting companies in the German semiconductor market like
especially I can see significant growth in the semiconductor supply chain and
there are several listed German companies that play crucial roles in
that field providing essential equipment materials and components that support for example memory chip manufacturing and AI related
technologies and I will highlight some interesting ones for actually two and
first is SUS Microtech and the ticker is SMHN and the company specializes in
semiconductor manufacturing equipment particularly for lithography
whale bonding and advanced packaging which is a key process for stacking chips in hbm used in
ai accelerators and this positions them really well in the memory shortage ecosystem as HBM production involves complex bonding
and via drilling that their tools enable. So this is a really interesting pick and the second one,
the second here is Infineon ticker IFX, actually known as a global leader in power semiconductors, microcontrollers and sensors,
which are vital for efficient power management in AI data centers and memory intensive devices.
And their products help optimize energy use and servers handling AI workloads indirectly
supporting also the memory chip ecosystem amid rising demand and as Europe's largest semiconductor firm by market cap
Infineon is expanding into the silicon carbide tech for high efficiency applications and they plan to target 30% of global market share by 2030
so these are really two interesting tickers outside of the
automotive market and outside of the defense tech market fantastic names there yeah i just took a
look at the chart for smhn so it's micro tech um looking very strong there on the weekly a little
pullback of course with the market but yeah very strong um infini a massive company
they are germany's largest semiconductor company by far with the power semiconductors i don't think
we've actually uh touched on that name actually before in the past shows um so so a few hands up
there sandipo loved your take on this and then we'll go back to a tilt i think maybe omovio will be an interesting one a-u-m-o-v-i-o as an interesting
thing to consider i think the ticker is a-m-b-0 which is an odd odd way of putting it i would have
hoped for at least four letters but okay but omovio was spun out of continental and has a
particular edge that actually gives that access to China, the China market.
It sells automotive, it sells automation, it sells software for vehicles.
40% of the average EV, 40% by value of an average EV is essentially software
and self-driving solutions or components related to charging and stuff like that.
solutions or components related to charging and stuff like that so the big portion of that is the
software that guides these complex components into interacting with each other and producing
the output required to get your car moving down the road so omovio is pretty interesting uh to
look at but again uh if we're not talking about outside of that, I think Commerce Bank, CBK, is an interesting play.
Again, financials are not very popular among retail investors and I don't know why.
They tend to be quite stable.
They pay out decent dividends.
They're pretty good to own actually.
You should at least consider at least 5% to 10% of your portfolio should be banks actually.
So it is transforming into a capital return play
and offers a total yield of i think about 20 10 percent between 2026 and 2028 that's the goal
actually and it is benefiting from higher for longer interest rates compared to the previous
decade so commerce bank is looking pretty good i think you just mentioned infinia yep i had in three on my list as well it is uh targeting an eight to ten twelve
billion market eight to twelve billion euro market especially specifically for ai data center power
solutions so that's there and since we're talking about high energy cost uh we should consider
siemens energy enr uh it has 138 billion euro backlog and it is basically central to the global energy
transition.
So 138 billion euro backlog ain't too bad.
And finally, of course, the thing that Germany has been fairly consistently good at weapons.
Ryan Metal, RHM, again, primary benefactor of European rearmament uh an order backlog of approximately 120 billion
by mid 2026 so there's going to be a lot of revenue visibility so these are some pretty
good companies out there but again the main state the most uh voluminous employers uh such as the
automotive industry or the manufacturing industry, they're a little harder.
But newer industries like these guys are doing pretty well.
Yeah, some really strong names.
The technology or software sector in Germany is actually around 20% weighted.
So SAP obviously being one of the largest ones.
And then industrials is around another 20% as well.
So your Siemens and Rimetal.
And then obviously the financials, as Sandeep suggested,
that's weighted to 18% in the indexes as well.
Alliance, Munich and Deutsche Bank and all these other banks as well.
Tiltfolio, are you back with us?
I see your hand up. Let's go.
Yeah. So if you don't hear me, just interrupt me
and let me know. No worries. You're good. I'm good. Okay. So what I wanted to say was, if you look at
MSCI Germany in the US, that's EWG, and you compare that to MSCI Europe, that's IEV,
you can see that, you know, since about 2022, Germany has been outperforming Europe,
just to, you know, answer the question directly. And yeah, you know, there has been some kind of
pullback since September of 2020, 2025 last year, but I think we're just at that inflection where,
you know, Mertz is talking about a lot of the mistakes that were made in the past.
And, you know, about changing things rapidly, you know, a lot of the mistakes that were made in the past and about changing things rapidly.
A lot of people on the show have said there's too much bureaucracy,
there's too much government intervention.
I think people understand that now, and I think changes are coming.
And to me, again, as a trend-following kind of systematic investor, I'm looking at it purely in the prices of the German market.
And I liked what Sandeep had to say about banks.
So if you compare Germany's biggest bank, Deutsche Bank, and then you look at a ratio of that to the U.S.'s biggest bank, JP Morgan,
there's dramatic outperformance of European banks generally, but especially German banks versus U.S. banks.
And banks generally tend to lead the broader market.
So again, so the funny thing is, if I look at Germany today, yeah, you know, Volkswagen,
terrible numbers, Porsche, Mercedes, I mean, all these big famous industrial businesses,
you know, beautiful combustion engines doing poorly. But then if you look at what the market
is actually saying, there's a lot of relative optimism for Europe. And also, I think we're just at that
inflection point for Germany. So as easy as it is, you know, to be very German and negative and
just write everything off as hopeless, you know, that's not how the market sees things.
So that's just, you know, my kind of two cents on how I see things.
No, I love that perspective. And that's a great way of looking at markets, you know, top down level and who the driver is for that specific type of market and sector. Great perspectives there. Investor, I see your hand up there. Do you want to go for it?
So we are still very good at building machines and this is why I brought you
an actual small cap from Germany that you might not have heard before. So the
company is called Berthold-Herml, the ticker should be MBH-free. I hope you
find it. So because the thing that we're still good in germany is that we have some
of the brightest minds in the world still here in germany that are also working on ai and other
things and even even that um wait let me see let me see yeah the company betold Hermel is actually manufacturing fully automated CNC milling machines.
So they were built to produce parts 24-7 without any human inside or around.
And now they are built with artificial intelligence.
And that's the job of Hermel.
They are building the machine
but they are also training them and the stock price has a significant dropped significantly
before but it was just because historically this automotive sector and berthold hamlet were
intertwined but right now it's suffering because of this of this market and but now we're kind of seeing
something interesting because Bertolt Hermle has seen maybe something of a new potential in a new
market because and it is the American defense sector actually because late last year there was
an American defense startup that bought a large number of these machines from Berthold Hamler and they equipped their factory halls with them, actually.
And they are now producing 24-7 and on the weekends defense material and equipment with these machines.
And the company itself is pretty German and they don't advertise themselves.
So you barely see it when you don't Google for it.
And because they could have easily marketed this as an advantage,
because last year I thought I had seen Pete Hexer touring around all these new factory machines.
And he was standing right in front of one
of these Bertolt Hamler machines.
And they could have used it.
They could have milked this new news, but they didn't do it.
And also Bertolt Hamler is, the management is rock solid.
It's family owned.
It has a great balance sheet. They have zero debt. They have a
cash position. And I think they are in a very good position to profit greatly from the increasing
automation in the future and from these still bright minds in Germany. Wow. Awesome name there.
I didn't even know about this company. Thank you so much for sharing that.
Mads, go for it. We'd love to hear your... Yeah, I don't know if you'd love to. I'm going to be a little bit pessimistic. And I just want to remind about geopolitics. I think it's so important that
you understand what market your business is going for. And I'm especially worried about European businesses
going for the American market
because of the relations between the United States and EU,
which is deteriorating somewhat.
On the other hand, you have Japan and United States building up relations really
quickly are aligned on the same agenda. So I think we're going to have a couple of years
where it's quite uncertain for European business going to the American market, what the terms will be, what the availability will be.
And you'll see American businesses trying to move their supply chains home.
So, yeah, I think we're going to see an effort in Europe to try to catch up.
So a European business selling to the European market,
I think that could be good.
But be careful about revenues coming from China
and from the United States, in my opinion.
Yeah, some definitely risks there to keep in mind for sure.
Investor, we would love for you to challenge that.
I don't want to even challenge that, but I want to go on of this idea with the German or the European market going to America for some profit,
because we have a very big player in the telecommunication market. It's called Deutsche Telekom that is already in
America and it's under the name T-Mobile US. You might know it already. And Deutsche Telekom is
actually, they have over 50% of the stock of T-Mobile US. And the funny thing is it's a German company that is mainly in Germany,
but also in Europe.
But let alone this position in America that they have with T-Mobile US
and the stock, the T-Mobile US, this 50% that they have
is already worth 80% of the market cap of of deutsche telecom and this is the funny fact
that i have listened to a podcast a few days ago where i was listening to the ceo of deutsche
telecom and he was telling us in germany that without the company in the u.s and the profits
from the u.s they couldn't power or they couldn't invest as much in Europe as they do now. So they are going to America very, very profitably.
And they're using these profits to maybe invest in Europe.
But also the CEO was telling us that he's unsure if he's going on to invest as much
in Europe.
And he's looking around in a world where he could profit anywhere else because of
the high bureaucracy in Europe again. Surely there must be a change coming for Europe if
Europe has such a high regulation it's slowly killing businesses here and is certainly very
notable and visible here in the UK and among other European countries that I've seen personally as well. And you can tell
from the numbers in the reports as well. If this is the case, do you think then when obviously
there's politics involved in this and trying to keep it as neutral as possible with people trying
to create sovereignty and protection of data, I know we discussed this on the AI show as well.
You surely think they would reinvest back into the country
and slowly rebuild infrastructure, no?
To make sure they're protected from other countries
and hold independency.
Because certainly this is a lesson I think China learned as well
quite early on,
well, now that they are definitely learning this.
I would love to hear your thoughts on this.
If any of you guys are thinking, yeah, go for it, InvestorBee.
That's a great thing because with all, artificial intelligence and all these data centers
and we want to be independent of the US, right?
And the funny thing is that I think Germany has the highest amount
or the second highest amount of data centers in the world, actually, after America.
And this is just mainly because of one city in Germany because and it's called
Frankfurt and the funny thing is Frankfurt is home to the most important
Internet hub in the entire world actually because and this grew
historically because all the global Internet cables converge in Frankfurt
and with and this makes the perfect
location for data centers right and that is a massive infrastructural advantage that we have
built in the past and we still profit from today but also here comes politic and politics in a way
again and the high energy prices because i also again heard a podcast from a startup that is building new data centers in
Germany and they wanted to build a new data center near Frankfurt and they had everything planned.
They had the architect, they had the land, they had everything but ultimately the project failed
just because the energy provider near Frankfurt wouldn't give them the green light because there
simply wasn't enough electricity to power this new data center. And that's kind of a shame. We have this much of an advantage
in our own country, but we can't use it properly because of these energy prices.
Yeah, that is a shame, you know, not to be able to grow in your own backyard because of these, you know, industrial constraints and supply chains issue as well.
Sandeep, do you have any thoughts on this? I know you have probably done some research on this, I'm sure.
Oh, yeah. Yeah. For example, I think I did a whole deep dive into German carmakers when they came up with the EU-India free trade agreement.
German car makers when they came up with the EU India free trade agreement you guys can check it
out on Substack for free by the way it is asianomics.substack.com I'll throw it throw up a link
there's a lot of stuff going on over there totally free to read uh has my deep dives on this but
essentially yes uh Europe German companies in particular while while expanding into Asia, were outsized beneficiaries of huge amounts of state-owned pushes, especially in China, with a company that is directly owned by beijing metro
by the beijing metropolitan government which is like the crown jewel of the chinese communist
party uh the volkswagen has a similar arrangement with three three state-owned car makers to
manufacture cheap cars some of which are actually sent over in parts then assembled in Slovenia I think in Volkswagen
in Slovenia and one of them is an EV I forget the name of the car it I wrote about it a long
time ago but uh yeah the yes so they it did this is probably something to consider about German
industries is that they have benefited from other countries spending on
them, but it came with a catch. The catch was technology transfer or IP transfers, which
Chinese car makers are using to their advantage and building on top of. The same thing, for example,
I talked about was Mercedes and BMW relies on a very powerful company in India, but not as one that is not spoken of very much called Force Motors.
Force Motors, by the way, manufactures a G-Wagon from the 1970s and 1980s.
And it's totally licensed.
They make everything by themselves.
And it's a beautiful thing that is found in larger and larger numbers in India.
And it's completely manufactured by
force motors force motors manufacturers the internal combustion engines which is one thing
that India is very good at manufacturing internal combustion engines and they learned over the last
30 years how to work with German car makers for example and build up without government subsidies
so if you're looking for government
subsidies in India you need to transfer technology this is basically what everybody is saying now
German car the German economy is basically a victim of its own currency essentially if the
euro wasn't so it wasn't so highly priced relative to other currencies they could fight you can see
how for example the japanese government does almost nothing to defend the japanese yen it
has never done anything to defend the japanese yen and that is because they wanted to remain
competitive in in exports but eventually it caught up with them and now it is becoming a demographic
issue much like germany where they're becoming a demographic issue much like Germany where
they're having a demographic issue in which there are literally fewer people available to work and
most of them don't want to work for the low wages being uh being offered in order to keep these
exports uh these manufacturing essentially competitive so both countries are sort of
you know Germany and Japan have a sort of parallel here in that if you offer, if it weren't for the fact about the way Japanese conduct business.
For example, there is literally a category in Japan of death, categorization of death.
How somebody died. It's called Kuroshi.
Kuroshi is overworked.
You work to death until you work to death doing 100 hours a week or something like that
for 40 hours of paid work,
and you eventually drop dead quite quickly,
usually in your late 20s or early 30s.
And people will look at this, Japanese people especially,
and say, I don't want to work like that.
So for the reputation built up,
you're not paying the price despite the reputation you build up
i guess that's what i'm trying to say so and that's because of external factors not really
related to the manufacturing excellence or the technology or the advancements made in
manufacturing or anything like that when it comes to germany or japan in this matter
interesting thoughts on that does anybody have any thoughts on that. Does anybody have any thoughts
on that? Yeah, Investobi, go for it. I just wanted to go on about the exodus of the companies going
abroad. You don't even have to look at the automotives only. You can also look at the chemical sector because and we have a very prominent example because
the arguably arguably the biggest chemical giant that we have in Germany is BASF the ticker should
be BAS and what we are seeing right now with BASF is they are gradually scaling back production here
in Germany in Ludwigshafen.
And they have already been the first waves of layoffs of stuff.
And meanwhile, the company in Germany is investing over 10 billion euros to build a completely new chemical plant in China.
So BASF isn't stopping production. So they are just simply migrating to where energy is cheaper because these heavy chemical industries need cheap energy and they get it from China.
So what we're seeing now is they're just going abroad and it makes totally sense from a business perspective. That is actually very insightful. Similar story to how earlier you talked about them going to America.
So abroad elsewhere other than the US as well, basically away from the homeland. Let's go for it.
Yeah, I think that's a giant red flag, really something you should really be careful about because that's not going to be sustainable geopolitically.
really be careful about because that's not going to be sustainable geopolitically.
The U.S. administration will never accept that BSASF is producing in China,
firing the production with Russian gas, and then eventually selling products in the States
or even if it's a part of the value chain,
if it's exported to Europe and then produced into something else
and sent to the United States,
they are never going to accept that in the future.
So I think it's an example of how we are not really getting on a sustainable path geopolitically in Europe right now.
It's not been very much in the press recently, but a new thing from the American administration is that they want to control where NVIDIA is selling chips.
And it's not to control chip sales to China because NVIDIA is not selling to China. It's not
to Russia. So I think it's going to be a political leverage that the United States will use to say to trading partners and defense partners
that if you are not a partner in all ways, you are going to be last in the queue for procuring NVIDIA chips.
So I think something has to change in Europe and it's not changed yet.
So I think one just has to be very careful and it's not changed yet. So I think one just has to be very
careful about it because it will change. I think it's becoming a dangerous game there. You're right
in geopolitical, you know, news, it can sway or even become very sensitive. Like for example,
Rheinmetall, right? Obviously what happens after if there's a peace deal, right? And the Middle East de-escalation, what happens to that company after?
So, yeah, some thoughts there.
Sandeep, see your hand up there.
Yeah, so I think we should not take this perceived threat,
the projection that the Trump administration is making towards china
as uh as something that will be met with immediate action across the board for example the trump
administration is very interested in ensuring that its citizenry can continue to enjoy cheap
products and the cheap and a high standard of living which is made possible by cheap products
and a high standard of living which is made possible by cheap products
china sort of makes itself indispensable by making cheap products via uh essentially
we are a pegged currency if you guys remember in some of your history books the soviet ruble for
example was pecked to one us dollar and the chinese the china china does the exact same thing with its
uh yuan a rinminbi sorry yarn was during the sorry r Rinminbi. Sorry, Yuan was during the...
Sorry, Rinminbi was during the...
Yuan was during the Qing Dynasty.
But again, sorry, the Rinminbi.
The Rinminbi is a pegged currency.
So that's exactly how they're...
That's precisely how they're controlling the flow of manufacturing.
So even if you notice the way tariffs were applied which are not gone for the
most part so good for that good about that but you notice the way tariffs were applied on China
they still try to keep it in such a way that they continue that the higher orders of the
economic machinery in the United States continue to that relied on China continue to receive
uh export that continue to receive
imports cheaply what was mostly hit which consumer product so BASF going over to China for example to
manufacture specialty chemicals makes it cheaper for more expensive businesses or more complex
businesses to thrive in the US or in Europe so but I will I will make it clear that
who's the people getting affected are the workers are the citizens of Germany who were working in
those factories uh so they are being affected but if you think of it as a as the elites versus the
plebs the elites continue to to thrive on that so china fulfills a very specific uh
specific niche there in the economic machinery of the united states of the western hemisphere
and you'll notice for example that uh india for example is still saying that i am not going to
make things cheaply for you i will make the things at the right price and i want to share i want the
ip because they're making
very for example the indian government is making very clear that i do not want to become another
china i am not going to make things cheaply uh there is no way we are going to control our
currency and our primary goal our primary initiative is to protect ourselves so uh it is up to the German politicians and the German
political leadership to sort of at least try and support these kinds of industries into not leaving
the country uh similar to all the United States actually does it uh there is a very strong support
for for example Boeing has a global manufacturing base including in China and India but Boeing will never leave
the bulk of its manufacturing activity in the United States precisely because the United
States government has come up with a series of incentives for it to never leave the United
States so this is some this is some food for thought is that for the people of Germany is that they should vote for people vote for politicians who will
actually support or sort of constraint industries from not leaving while taking into account the
fact that things cannot always be as cheap as it is and there's going to be some sort of
rationalization about how the how costs are impacting consumers or how costs are impacting other industries.
It's a complex conversation
and it is not being added, essentially.
Interesting there.
And thank you so much for your thoughts there, Sandeep.
Really insightful.
Kuki, welcome.
Welcome to the German show.
Do you have any thoughts on the German market?
How are we doing?
A little bit outside of my normal comfort zone.
You sound like you've got some very, very good learned speakers.
My two cents would be for exposure.
I'd probably be looking at one of the broader European ETFs out there.
There's a couple of very established ETFs that have coverage across,
but are very heavy German weighted.
So that typically tends to be as far as I go with my client bank anyway,
is just to give that exposure.
I can see some of the stuff that's been spoken about around Ryan Metal
Ryan Metal and a few of the other sort of defensive ETFs,
and a few of the other sort of defensive ETFs.
they probably can be way, way better for the more focused exposure
you guys have been talking about so far.
Yeah, absolutely.
Thank you for sharing.
Yeah, there is always the ETF side.
I have shared and pinned up in the post here from Sandeep from Leverish share so you can you can check out if you want some
exposure in the german market there um alex do you have anything to touch on before we wrap up
yeah well i would i would probably say i'm uh probably a little bit more aligned with tilt
folio i'm similar in that way where um i look at what price is doing, ratios and stuff like that.
I don't go into companies as much.
And just my two cents are as long as Germany is a little unclear,
it's losing its sort of big boy pants in Europe.
And what I wanted probably to touch on there was, well, the yield spike with the instability in the Middle East.
And for decades, it's been the opposite.
So as long as that's the case, I'm not going to speculate other than look at where money is flowing.
And that's going to be defense and infrastructure.
I can't speculate more than that.
That's what I'm seeing. And everybody,
like I personally would probably play something like grind metal, but if I were to, but since
we should find some interesting tickers for listeners, handshold hag, they do sensors and
they're radar specialists. So that's going to be a company that could potentially benefit
from these incentives.
And then we also have a small one here,
Fredrich Vorweck.
I actually lived in Germany,
so I should have better pronunciation,
but they focus on energy infrastructure.
So pipeline constructions, gas infrastructure,
electricity grid build-out, and hydrogen networks.
So these are two tickers that maybe listeners can check out
if they're interested in these sectors.
And additionally, I'm just going to say Grusskot to all the Germans.
Awesome.
Yeah, some great tickers discussed here on the show today.
If you want to re-listen back and do some research,
do re-post and share this so you can come back and re-listen.
Give all of our guests a follow.
They have been absolutely fantastic here today.
I want to thank everyone for their time.
Any last remarks from anyone?
No, I think that's all about it for we have time for today.
I'm afraid I know there was in daylight savings time zone change over through US folks there a little bit.
Coming up here, we have on the show here today, we have our usual trading coming up in 20 minutes or so with the guys live trading on the nasdaq and s&p 500 and the u.s
markets if you're into that stick around uh for under the wolf trading account the one with the
black logo icon later on today we'll also have some investing from alpha investing and tesla fans
you can tune in at 12 p.m eastern time as well And for more stocks and tickers on today, we have 3 p.m.
That's later on Stocks on Talk.
And yeah, stick around if you want to tune in.
I want to thank everyone's time.
On Thursday, we'll be looking around the real estate market
and looking at the state, what it is like in Europe.
Doesn't look good in some areas,
might look attractive in some areas.
So we'll definitely visit that on thursday at 8 a.m i know our usual time stop is 7 a.m eastern but for the
folks in the europe it is still 12 p.m uk time until we shift our clocks end of the month apart
from that thank you all for coming today on the show and give them all a follow and have a fantastic day guys thank you
thank you so much Thank you.
