Caution: The next commodity rally boosts Globex but brings higher costs for VW, BMW, and BYD!

BYD - Conquering Europe in its sights

The Chinese technology and automotive group BYD is aggressively pushing into international markets, with Europe playing a major role. However, the challenge is proving tougher than anticipated. In January 2024, the Company already had to significantly reduce its prices for electric vehicles in Germany, as competition for electricity customers had become extremely fierce following the abolition of the environmental bonus. The crux of the matter: many potential buyers are adopting a wait-and-see attitude, curious about how Europe's political climate will evolve. After the significant shift to the right in the European elections, many consumers are expecting the ban on combustion engines to be postponed or removed. In Germany, BYD currently offers five purely electric models: Atto 3, Dolphin, Seal, Tang, and Han. With this range, the Company even recorded a decline in sales for the first time in August 2024 from 240 to 218 units. As a newcomer, BYD has achieved a European market share of 0.1%.

BYD announced in August 2024 that it would take over the German distributor Hedin Electric Mobility in order to expand its local sales network; the new plant in Hungary is due to be launched in 2026. The list price for the entry-level Atto 3 model in Germany is currently EUR 36,394; it is available in China for around half the price. The surcharge for BYD vehicles is 17.4% under the new EU import rules. Fundamentally, a closer look should be taken at the BYD share, as the Chinese stock is trading at an impressive 14.5 compared to VW's 2025 P/E ratio of 3.5. In chart terms, the stock has been trading in a narrow range of EUR 24 to 28 for the past 6 months. The massive 500% rally since 2019 seems to have ended. Caution at the platform edge!

Globex Mining - Commodities in abundance

Whether precious metals or industrial metals, Globex Mining (GMX) has the right answer. The Canadian explorer and asset manager from Quebec has over 250 projects in its portfolio. Although the focus is clearly on gold properties, Globex can support international efforts to secure strategic metals. Several industry representatives have already made representations to CEO Jack Stoch. Time and again, the Company succeeds in optioning one of its numerous claims to an explorer and participating in the subsequent mining success. The Company, including its predecessor companies, has more than 40 years of growth and development behind it, but it continues to expand its portfolio and conclude occasional sales deals. This ensures that Globex always has liquidity and a high level of financial strength and does not have to constantly refinance like other commodity companies.

Those familiar with CEO and founder Jack Stoch know that more success stories will likely be announced in the coming weeks. In early August, there was news from the Crater Lake area, where partner Scandium Canada Ltd. had carried out logistically remote drilling work and encountered mineralization in all holes. Numerous deposits of scandium and rare earths are located on the Globex property, which is in the immediate vicinity of Schefferville. Currently, there are approximately 57.7 million fully diluted GMX shares, trading actively between CAD 0.80 and CAD 0.90. Compared to the 2023 lows of CAD 0.68, this is already a premium of 25%. If gold continues its momentum above USD 2,500 as expected in the near future, Globex shares should set off on the next sprint upward.

BMW and Volkswagen - It is all about the supply chains

The Supply Chain Act, officially known as the "Corporate Due Diligence in Supply Chains Act", has a significant impact on the automotive industry as it requires companies and suppliers to respect human rights and environmental standards along their entire supply chain. The new law requires them to monitor their production processes and all upstream and downstream stages of the value chain - from raw material extraction to completion. This requires detailed insights into the origin of raw materials such as copper, nickel, cobalt, lithium, and rare earths, which are particularly important for the production of electric vehicles and batteries. Companies not fulfilling their due diligence obligations can be fined or excluded from public tenders. However, paying close attention to the same should lead to a competitive advantage as consumers increasingly look for more environmentally friendly and ethically produced products.

Volkswagen and BMW have already established comprehensive ESG principles and are constantly reviewing their supply chains. During the COVID-19 pandemic, deficits resulting from international outsourcing activities at the turn of the millennium also became apparent. Even though both companies have their sights set on switching to environmentally friendly drive systems, it is not yet clear whether the consumer will help to finance the increase in product prices or whether the manufacturers' margins will continue to fall. The charts of German car manufacturer shares are under significant pressure in 2024 because, in addition to high energy prices, German industrial policy is also putting pressure on business success. There are many indications that the major correction in the automotive sector is not yet over.

The stock market is currently taking no prisoners. While commodity stocks like Globex Mining remain in demand due to high commodity prices and strong gold performance, automotive stocks are increasingly consolidating. Rising costs, margin pressure, falling sales, and an unsettled consumer create an unfavorable environment for significant growth. The DAX 40 index is also likely to feel the weakness of the major industrial stocks soon.