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Market Round Up: OilCos overvalued, Big boys and cryptos

by | 6 Aug, 2018

1. OilCos over-valued

A recent report by investment company, Sarasin Partners, has accused Europe’s largest oil companies of exaggerating the value of their oil stock assets.

Despite the price per barrel rising from $50 to $73, and oil companies reporting healthy profits as a result, the report argues that companies may have not priced in the fact that the world is weaning itself off oil and gas needs. The companies interviewed, BP, Cairn Energy, Equinor, Eni, Repsol, Shell, Soco International and Total have generally set long term price assumptions of $70 to $80 a barrel over the next couple of years, rising to $127 to $145 by 2050. But the global decarbonisation mandate set at the Paris accord is expecting everyone to eliminate their net carbon emissions by 2070.

So who’s right? There’s seems to be an evolving speculation of fiction into factual information. Of course, such views encourage volatility – which is usually a traders best friend.

 

2. Big boys and cryptos

There are over 500 cryptocurrency exchanges and 1,500 cryptocurrencies in the world today. There are millions of individual trading accounts, and yet there are very few banks, hedge funds and prop trading firms on the bandwagon. Why so?

Maybe it’s because it’s a completely new style of investing and financial institutional conservatism just hates change. In reality it’s due to pragmatic reasons. There are two major issues that still need to be overcome: the need for regulated custodians and the elimination of settlement risk. More immediate is the need to instil confidence in secure systems following the spate of exchange and wallet hackings. The fact is financial institutions are working very hard behind the scenes to become big scale participants in the crypto markets. After all, there’s a lot of money being banded around which they would like to ‘manage’. But in return, regulators do need to hold their hands.

In the meantime, small-scale fintech disruptors will continue at a pace to open up new opportunities that cryptos, and blockchain in particular, offer. What will be interesting to see is if traditional institutions can eventually knock them out, merge, acquire or invest in these disruptors, or just roll up and die!

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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