Speedbumps Ahead 🚧 Malaysian Crypto Battle 😯
1. Speedbumps Ahead
The word on everyone’s mind this week is volatility, volatility & more volatility. With an inordinate amount of important announcements on the cards this week, the markets are sure to be shaken up a bit. So hold on tight!
Asian markets kicked off the week in the red after disappointing Chinese trade data spooked investors into sell-off mode. Both exports and imports fell by more than was expected in the world’s second largest economy, dampening the positive sentiment of the last two weeks.
Ahead of the UK’s Brexit vote Theresa May has warned of a higher likelihood of a no-Brexit than no-deal, should her plans be voted down tomorrow. However, many investors are brushing her remarks off as scare tactics to add pressure on voters to approve her deal. The expectation is for MP’s to still vote overwhelmingly against her deal. But only time will tell.
The US shutdown has now become the longest in history as President Trump continues to hold government employees’ salaries and important data to ransom over his border wall financing. Investor stress levels are climbing as the economic impacts start looming into view.
Earnings season starts today with the big US investment banks and Netflix due to post reports. After a rough fourth quarter, investors are likely to be wary of some disappointing results from the big names.
So, keep your wits about you this week. It may get bumpy!
2. Malaysian Crypto Battle
The Malaysian government is still on the fence about legalising cryptocurrency and the regulations surrounding the wild west landscape of Initial Coin Offerings (ICOs). Come on guys, what’s the hold up?
The government has been in talks with its central bank since December, but no clear result has come to light. This leaves crypto, “neither legal, nor illegal” according to Federal Territories Minister, Khalid Abdul Samad.
The fuss over legality has come about as a result of the first blockchain backed political fundraising ICO, called Harapan Coin. Whilst some are touting the benefits of such fundraising and federal payment mechanisms, others have concerns about the government’s eagerness to adopt “trendy, but untested schemes.”
The fear is that involving federal payments such as licenses, fines, summonses and political donations will lend itself to corruption and political misuse. Well, they’re not wrong there!
Whilst the brakes have been put on for now, the Territories Minister has said the battle is far from over and that crypto has an important part to play in Malaysia’s future. Let’s see if he’s right.
Today we are watching…
1. Citigroup (#citi)
Citigroup is set to post its Q4 earnings today which are likely to set the tone for the entire banking sector this week. Citi’s shares have recovered some of their 30% decline that started in October. However, rough global conditions may have taken their toll on banks in the final quarter. The earnings per share estimate is $1.55 and revenue estimate is $17.56 billion. Keep your eyes peeled for this result. It’s a big one!
2. Netflix (#netflx)
Investors are gearing up for Netflix’s earnings which are due to be published on Thursday and could send it through the roof or floor depending on the outcome. Since Christmas the stock has been on an unstoppable 45% bull-run fueled by its smash hit, Bird Box. However, markets are expecting weaker earnings data that may push its share price lower, but a surprise earning beat would allow the bull-run to carry on.
The history of the stock market is one full of quirks, anomalies, and quite unbelievable facts.
Here are five more you (probably) didn’t know…
1. The NYSE is the largest stock exchange in the world by market cap
The New York Stock Exchange (NYSE) is massive. But just how big are we talking?
Well, with more than 2,400 companies trading on it, and 1.6 billion shares traded every day, it’s a hive of activity.
And with a combined market capitalization of approximately $22.59 trillion (as of March 2018), it significantly dwarfs its nearest rival, the Nasdaq (market cap of around $11 trillion) as the largest stock exchange in the world.
Like we said. Massive.
2. China’s, on the other hand, isn’t as big as you might think
When you listen to early-morning financial commentators, they’ll almost always discuss what happened in China while you were tucked up in bed. This level of media coverage might make you think that China’s stock market is a major player, but the truth is, it’s not. Not yet, anyway.
At the moment, it makes up a very small percentage of the global equity market. Only 3.1% to be precise. Compared to the 51.3% the US represents, China has a long way to go.
3. Unlike October, September is actually a bad month for investing
Historically, on average, the stock market’s three leading indexes (the Dow Jones, the S&P 500, and the Nasdaq) have all performed poorest during the month of September.
Why? Well some believe it could be down to investors going on vacation, and holding back from selling stocks over the summer. Once they return to work and exit those positions, the market experiences increased pressure to sell, which in turn results in a decline.
Meanwhile, the so-called ‘October Effect’ is nothing more than a psychological quirk. Some investors might get nervous when October rolls around because a few of the worst crashes in history happened to take place in that particular month, but there’s no data to support it as a legitimate phenomenon.
4. Pirates in Somalia have set up a stock exchange to fund missions
Forget New York and London for a second, pirates in Haradheere, Somalia have set up a stock exchange to give Somali civilians the opportunity to invest in their hijacking missions.
How does it work? Each investor receives a cut of the ransom paid out on a successful mission. And you don’t have to use cash to invest either. One woman contributed a rocket-propelled grenade and received a $75,000 ”dividend” in return. Now that’s something you won’t see on Wall Street.
5. When the Indian cricket team lose, stock prices fall
According to researchers from an Australian University, a sharp decline in Indian stock prices takes place the day after India loses at cricket.
This curious anomaly is a great reminder that stock prices, while governed by supply and demand, are also at the mercy of an investor’s emotions. We might want to try and boil everything down to numbers and statistics, but we are, after all, only human. A bad mood caused by your favourite sports team losing can have wide-ranging consequences!
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