Reinhard Panse's Perspectives
Reinhard Panse's Perspectives
Podcast
31.1.2025
Is this enthusiasm justified or should we remember the old stock market adage "The greatest euphoria often harbors the greatest danger"?
The AI hype, the main driver of the current IT euphoria, has now started to crack. The Chinese start-up DeepSeek recently presented an AI model that can keep up with the leading systems from the USA in performance tests - and with significantly fewer resources. While companies such as OpenAI rely on state-of-the-art Nvidia chips, DeepSeek has trained its model with a comparatively low budget of just 6 million US dollars despite not having access to these chips. Even more remarkably, the use of the AI can be offered at a fraction of the cost - around 3% of the price OpenAI charges for similar services. This development shows that advanced AI models do not necessarily depend on expensive US hardware or massive investments. Instead, the AI sector could prove to be a highly competitive market in which new players with innovative approaches can quickly gain importance.
At the same time, the economic environment remains tense. Leading economic indicators in the US, Europe and China show continued weakness. While the risks of recession were still considered high everywhere in the fall of 2022, many market participants now seem to be underestimating them. In China, the economic mood remains gloomy, as the latest declines in the purchasing managers' indices show. Geopolitical uncertainties - from the US elections to tensions in Asia - could also prove to be a negative factor for the markets.
A broadly diversified portfolio that also invests in more stable sectors therefore seems more advisable than a one-sided bet on US tech. Healthcare stocks and consumer staples remain particularly attractive. These sectors are not only resilient in times of crisis, but also have solid long-term earnings expectations. Gold remains a proven safety anchor, the importance of which is increasing in the face of growing sovereign debt problems. Government bonds also (still) retain a risk-reducing function.
Reinhard Panse's Perspectives
31.1.2025
Reinhard Panse
The capital markets are starting the new year on an optimistic note. US equities in particular - especially the IT giants - are seen as promising by fund managers.
Is this enthusiasm justified or should we remember the old stock market adage "The greatest euphoria often harbors the greatest danger"?
The AI hype, the main driver of the current IT euphoria, has now started to crack. The Chinese start-up DeepSeek recently presented an AI model that can keep up with the leading systems from the USA in performance tests - and with significantly fewer resources. While companies such as OpenAI rely on state-of-the-art Nvidia chips, DeepSeek has trained its model with a comparatively low budget of just 6 million US dollars despite not having access to these chips. Even more remarkably, the use of the AI can be offered at a fraction of the cost - around 3% of the price OpenAI charges for similar services. This development shows that advanced AI models do not necessarily depend on expensive US hardware or massive investments. Instead, the AI sector could prove to be a highly competitive market in which new players with innovative approaches can quickly gain importance.
At the same time, the economic environment remains tense. Leading economic indicators in the US, Europe and China show continued weakness. While the risks of recession were still considered high everywhere in the fall of 2022, many market participants now seem to be underestimating them. In China, the economic mood remains gloomy, as the latest declines in the purchasing managers' indices show. Geopolitical uncertainties - from the US elections to tensions in Asia - could also prove to be a negative factor for the markets.
A broadly diversified portfolio that also invests in more stable sectors therefore seems more advisable than a one-sided bet on US tech. Healthcare stocks and consumer staples remain particularly attractive. These sectors are not only resilient in times of crisis, but also have solid long-term earnings expectations. Gold remains a proven safety anchor, the importance of which is increasing in the face of growing sovereign debt problems. Government bonds also (still) retain a risk-reducing function.
About the author
Reinhard Panse
Reinhard Panse is Chief Investment Officer and co-founder of FINVIA Family Office GmbH. Until February 2020, Reinhard Panse was a member of the Management Board and Chief Investment Officer for HQ Trust GmbH, which is owned by the Harald Quandt family. From 2004 until joining HQ Trust GmbH in 2011, Reinhard Panse was Chief Investment Officer of the UBS Sauerborn business unit created within UBS Deutschland AG. From 2001, Reinhard Panse was a member of the Management Board of Sauerborn Trust AG and its legal predecessors. He was responsible for the investment strategy and played a leading role in the holistic asset management and administration of large private assets. Reinhard Panse began his career by taking over capital market and client support activities at Feri GmbH in 1989, after having founded and managed his own wealth management as managing director.