Market Round Up: Silk Road’s Journey into Debt 🚆 – Tech Stock Shorts 👖

by | 30 Aug, 2018

 

1. Silk Road’s Journey to Debt

China President Xi Jinping’s Belt and Road initiative, aka the New Silk Road, is running the risk of scaring off potential partners.

At the heart of the superhighway programme that will connect 68 countries and nearly 4.5 billion people from Asia, Africa, the Middle East and Europe are a complex baggage of mega infrastructure projects – which China doesn’t expect to fund itself.

Despite investing something like $60 billion in partner countries, raising trade volumes to $734 billion and creating hundreds of thousands of local jobs, the shear scale is seen as little more than ‘debt book diplomacy’ by partner countries fearing Chinese geo-political dominance. Recently, Australia’s foreign minister, Gareth Evans, warned that Cambodia and Laos were nothing more than “wholly owned subsidiaries of China” having borrowed over $5 billion. Worse, a recent report from the Center for Global Development showed that 23 countries are prone to ‘debt distress’ or, because of the perceived cheapness of the loans, more like a student debt with never-ending repayments.

Still, it may be a price worth paying. Economic progress in the emerging markets requires infrastructure investment, which inevitably means debt. The point is, is it a wise investor who journeys down the Silk Road?

Related: Market Round Up: Brexit’s Cabinet Chaos, 3Ds of Deflation, Car Emissions

 

2. Tech Stock Shorts

Short bets on tech stocks have risen by more than 40% to $37 billion as investors hedge against some of the biggest drivers of the global bull market.

Tech stocks, especially the elite FAANG group (Facebook, Apple, Amazon, Netflix and Google), have seen their prices surge all year and, as the old adage goes ‘the greater the rise, the greater the fall’. And so these dominant companies are being targeted as the most favourable to short. And with talk of the record bull market coming to an end, many investors are preparing for the shock dip.

Time will tell if these punters get it right, or whether they loose their shirts as well as their shorts!

Related: Have you thought about buying British equities? Now could be the perfect moment

 

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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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