The conclusion of the war significantly boosted Germany's economic growth.
The recent soaring of the Dax index has hinted at the potential profits German businesses could reap from an end to the Ukraine conflict. According to Baader Bank's capital market analyst, Robert Halver, who spoke to ntv, a truce would bring geopolitical positivity. Moreover, German companies, known for their expertise, could spearhead Ukraine's reconstruction efforts, which could involve investments worth up to three trillion euros.
In Halver's view, various German corporations, such as mechanical engineering giants and Siemens, among others, would hugely benefit from such a massive rebuilding project. He further mentioned that lower energy prices could bolster financial health within energy-intensive German industries, currently grappling with soaring energy costs due to escalating tensions.
Germany has managed to minimize its dependence on Russian gas and oil. Alternative energy sources, like liquefied natural gas (LNG) from the US, are becoming increasingly popular. Despite political tension, European countries, including Germany, are expected to continue purchasing cheaper gas from Russia in the long term.
The possibility of a peace treaty has had mixed impacts. While oil prices have temporarily dropped, share prices of German arms manufacturers experienced temporary pressure but quickly bounced back. Halver believes higher defense spending will be sustained regions after a peace deal, as the EU responds to Trump's calls.
Marion Gridl, an investment consulting firm expert, recommends purchasing shares in the industrial sector, with particular focus on the arms industry, noting the sector could benefit further due to increased security spending and possible sustained arms demand.
The prospect of peace discussions has given a boost to arms manufacturers' stocks, with Rheinmetall witnessing the most significant surge recently. HSBC analysts have also raised their targets for Rheinmetall shares, suggesting further growth in the sector.
However, it is essential to consider other aspects as well. An end to the conflict may result in reduced demands for military equipment, potentially impacting the arms industry. Alternatively, companies could consider diversifying their production facilities to focus on civilian sectors, creating new opportunities and stimulating the economy. Regardless, for now, the potential economic benefits present a compelling picture.
The ceasefire in Ukraine could pave the way for Germany to participate in the Economic and Monetary Union, as stabilized geopolitical conditions could make such a union more feasible. Analysts suggest that the economic potential of reconstructing Ukraine, estimated at over a trillion euros, could significantly benefit German companies, particularly those specializing in mechanical engineering and energy. The decrease in energy costs due to alternative energy sources like liquefied natural gas could further enhance the financial health of energy-intensive German industries.
