Happy New Year, Bitcoin Faces Regulatory Scrutiny After Record-Breaking Rally, Mythical Hedge Fund Hindsight Capital Scores Big in 2020,
Out with the old and in with the new! Starting the new year off with more motivation, positivity and some resolutions will ensure 2021 is your year!
Dr Atie J El Mouallem
Bitcoin Faces Regulatory Scrutiny After Record-Breaking Rally – Bloomberg
Warnings of rampant money-printing by global central banks — some of which started to reveal their own interests in digital assets — sparked fears of eventual inflation, while interest rates dipped to rock-bottom lows.
There are some concerns about what the incoming Joe Biden administration might mean for the crypto space.
According to eToro’s Hirsch,
Without knowing how authorities will seek to more robustly regulate crypto in the coming years, it is hard for the markets to continue growing at the same rate they are now”
Dubai’s Al Mal Capital raises $95.37mn from its REIT listing – GCC Business News
The IPO proceeds will be utilized along with Islamic financing from local banks for investment in healthcare, education and industrial property sector assets.
It targets to achieve an annual 7 percent return, distributing at least 80 percent of its income to investors, according to the bourse filing.
Mythical Hedge Fund Hindsight Capital Scores Big in 2020 – Bloomberg
Go to Rio
Whatever the investment, a weak currency transforms it (a phenomenon known as money illusion): hot “FAANG” stocks gained 160% in Brazilian reais and only 76% in Swedish kroner, the year’s strongest currency; 20-year Treasury bonds gained only 2% in kroner, but 50% in reais.
Catching Rays
With breakthroughs in solar power technology as solar companies consolidated, this was the time to put money into solar. It was a spectacular success. Putting the trades together made 431%.
Bricks to Clicks
Hindsight logically bet against hotels, resorts and cruise lines. It foresaw the excitement to invest in any company with guaranteed profits and loved the prospects for the internet retailers as ever more of their brick-and-mortar competitors vanished forever.
Going Long
Shorting the banks and using the money to lend to Austria made 83% in local currency, having peaked at 158% before the vaccine announcement.
Home Sweet Home
Hindsight played a likely surge in homebuilding by buying futures in lumber, where the boom would show up first.
Crypto Mania
Bitcoin is the best known cryptocurrency, but Ethereum, which embeds contracts in the blockchain, was an even more exciting prospect.
China’s Three Mistakes in 2020: Ant IPO, K-Shaped Recovery, SOE Defaults – Bloomberg
Underestimating the K-Shaped Rebound
The K-shaped rebound shouldn’t have come as a surprise: The macro statistics gave plenty of cues. Manufacturing bounced back quickly, while retail sales, a barometer of broader consumer confidence, lagged for months. Luxury items were doing well, with high-end cars selling fast and the likes of Chanel and Louis Vuitton raising prices.
Muzzling Billionaire Critics
On Nov. 3, it suspended the $35 billion public listing of billionaire Jack Ma’s Ant Group Co
On Dec. 27, the central bank said in a published Q&A that Ant has “little legal awareness” and asked the fintech giant to return to its core, less-lucrative digital payment business.
China may no longer care about public relations. But it does want foreign money to help finance its own fiscal deficits. The untimely Ant fiasco puts all that at risk.
Mishandling Defaults
Pinched by oversupply and dwindling profit margins, SOEs started to default here and there as early as 2015.
Loss-making ones somehow get AAA ratings, and there’s not enough credit spread in China’s $4 trillion corporate bond market to differentiate between quality and riskier assets.
Jack Ma Could Save Ant by Applying Lessons From Goldman Sachs in 2008 – Bloomberg
2008, after the collapse of Lehman Brothers, Goldman Sachs Group Inc. and other Wall Street heavyweights made a similar transition, from broker-dealers to bank holding companies. Goldman turned out just fine.
In September 2008, during the global financial crisis, Goldman announced it would become a bank holding company to navigate challenging financial markets.
Morgan Stanley made a similar announcement the same day. The Wall Street giants became subject to new rules for accounting, leverage tests and thicker capital buffers, growing stronger in the decade since.