Investors need to avoid complacency as Trump potentially marches off to a multiple front trade war, warns the boss of one of the world’s largest independent financial advisory organizations.
The warning from Nigel Green, founder and CEO of deVere Group come as worries of a trade war between the U.S. and China have further increased, causing markets to slide around the world. The fears intensified after it emerged that President Trump is preparing a new crackdown on Chinese investments in America.
Mr Green comments: “Up until now the markets have been remarkably nonchalant regarding the escalating tensions between the world’s two biggest economies over the last couple of months.
“However, as the Trump administration sets out increasingly aggressive restrictions on what they see as China’s unfair trade practices, and because Trump is on the trade offensive on many fronts, including against traditional U.S. allies, the worries are now becoming much more focused.”
He continues: “There really hasn’t been any major asset class or any part of the world Trump hasn’t spoken out against in recent weeks. As such, if investors are serious about growing and safeguarding their wealth, complacency should no longer be an option. Vigilance is crucial.
“Now is the time for investors to ensure that their portfolios are properly diversified.
“As history teaches us, diversification is the best way an investor can position themselves to mitigate risks – and also, importantly, to benefit from the buying opportunities that all bouts of market volatility present.”
Mr Green goes on to add: “It is likely that Mr Trump’s bombastic tactics are just negotiating strategies and he will not totally overhaul and/or disrupt trade patterns.
“However, due to the scope and depth of the potential fall out of a U.S.-led trade war on international trade and global growth, investors should be actively looking to review and, if necessary, rebalance their portfolios.”
The deVere CEO concludes: “Investors need to brace themselves for months of heightened posturing from the different parties, which is likely to increase market turbulence.
“And as Trump potentially marches off to a trade war, a good fund manager will help investors sidestep the risks and embrace potential opportunities.”
Why the future of VC investment will be more about ‘venture building’ than equity share
By Shawn Tan, CEO of Skymind
We all know that historically the VC industry has been based on the belief that if one portfolio company goes bust, it doesn’t really matter. The bigger bet is that another portfolio company’s breakout success will override the losses of the rest. It isn’t surprising then that there are plenty of VC horror stories, which are not difficult to find.
Whether it’s the M&A bait and switch or sacrificing future profitability, the old ways of doing VC can be famously detrimental to entrepreneurs. For example, a founder who sells their startup for $1 billion could end up with less money in their account than someone who sold for $100 million.
It can take multiple funding rounds to reach the billion-dollar valuation, with each round chipping away at the founder’s stake in the company. Ultimately founders can end up with a tinier slice of a larger pie when the truth is that the bigger portion of the smaller pie could have been much more valuable.
Yet over the last decade, the VC market has exploded: Crunchbase shows more than $1.5 trillion invested into venture capital deals globally over the past decade. VC isn’t going anywhere, but I believe it is evolving, and in the future, VC investment will place more emphasis on venture building rather than equity share.
Forward-thinking VCs will seek out innovations that are good for society and not just their business value, mirroring a rise in environmental, social, and governance (ESG) focused investing. Last year, 38% of financial professionals were using or recommending ESG funds, with nearly a third of financial professionals planning to expand their use or recommendation of ESG funds over the coming year.
This symbolises a paradigm shift into a more socially responsible form of capitalism, where there is an emphasis on serving “stakeholders” like customers, employees and communities as opposed to only shareholders. Beyond genuine environmental concern, ESG investing can also be seen as a risk-management strategy. There is more long-term viability for companies that are run sustainably, from both consumer and regulatory standpoints.
As a result, VCs will be looking for disruptive and tenacious founders. They will actively seek out entrepreneurs set on creating technology with the most significant social impact, who have plans to get their ideas to market as quickly as possible. The future of VC investment will be about creating true partnerships with the companies they support, which is the heart of venture building.
Venture capital has historically been about placing a certain amount of money in a company and hoping for a certain return. On the other hand, venture building requires much more from the investor: time, energy, services and expertise, alongside capital. Venture building is about selecting business ideas, creating teams, sourcing funds, supporting the ventures and supplying shared services.
It is about working closely with the entrepreneurs to supply them with an entire suite of service support, from financial backing to corporate client introductions and talent acquisition. The quality and dynamics of networks play a unique role in the venture building model. The model relies on sourcing a specific and unique blend of expertise to turbocharge portfolio companies faster than competitors.
In an increasingly globalised world with large-scale challenges never faced before, we firmly believe that venture building with ESG credentials will become the gold standard for investing in the future. We are excited to be taking this approach at Skymind, and we hope that it won’t be long before others follow our lead.
Skymind is the world’s leading open-source enterprise deep-learning software company and the first dedicated AI ecosystem builder, enabling companies and organisations to launch their AI applications and bring their business cases to life. We provide clients with supported access to Eclipse Deeplearning4j and other open source tools as well as global capital funding and talent development. Skymind is headquartered in London, UK, with offices across Asia and Europe. For more information visit the website. https://skymind.global/
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GameStop surges more than 18%, other ‘meme stocks’ also rally
By SinÃ©ad Carew and Lewis Krauskopf
(Reuters) – GameStop and other â€œmeme stocksâ€ mounted a late-day rally on Monday, with shares of the video game retailer climbing nearly 32% at one point on little apparent news.
Shares of the videogame retailer, along with other stocks favored by retail investors congregating in online forums such as Redditâ€™s popular WallStreetBets, have roared back in recent sessions after a wild ride in which they soared in late January and tumbled early last month.
Along with GameStop, which pared gains to close up 18.3%, cinema chain AMC Entertainment finished up 14.6% and headphone maker Koss added 13.4%.
At one point, GameStop, which closed at $120.40, reached a session peak of $133.99. Its low for the day was $99.97.
Some analysts said a tick higher in short positioning from last week may have provided some fuel for the rally. A short squeeze – in which a flurry of buying forces bearish investors to unwind their bets against the stock – was a key catalyst behind GameStopâ€™s late January run, when it gained as much as 1600% before reversing.
The number of GameStop shares shorted stood at 17.74 million, analytics firm S3 Partners said on Monday, with short interest accounting for about 32.6% of the float, compared with about 26% a week earlier, according to S3 Partners. Short interest peaked at 142% in early January, S3 data showed.
“We’re definitely seeing some of the shorts who came on over the past week probably covering and it’s helping boost today’s rally,” said Ihor Dusaniwsky, managing director of predictive analytics at S3. “Looking at today’s price movement, I’m sure these big red numbers are going to be chasing out quite a few shorts out of their positions.”
GameStop short sellers were down $331 million in mark-to-market losses on Monday, bringing year-to-date mark-to-market losses to $5.1 billion, according to Dusaniwsky.
More than 48 million shares in GameStop changed hands, with volume surpassing the 10-day moving average. So far the stock is up 539% year-to-dated. However, it was still below its Jan.28 peak of $483.
(Reporting by SinÃ©ad Carew and Lewis Krauskopf; Editing by Ira Iosebashvili and Dan Grebler)
Wall Street rallies on U.S. stimulus and vaccine hopes as bond markets calm
By Suzanne Barlyn
NEW YORK (Reuters) – Global equities markets rose and the S&P 500 on Monday had its best day since June 5, with investors taking lower U.S. bond yields in stride on optimism over the $1.9 trillion coronavirus relief bill and distribution of Johnson & Johnson’s newly authorized COVID-19 vaccine.
Wall Street’s rise follows a jump in European shares and solid gains on Asian stock markets.
Investor optimism that the J&J vaccine would further lift the economy is “giving a lift to all of the ‘go-to-work’ stocks” that benefit from businesses reopening, said Jim Awad, senior managing director at Clearstead Advisors in New York.
A stabilization of U.S. Treasury yields has also removed pressure from growth stocks, Awad said.
The Dow Jones Industrial Average rose 603.14 points, or 1.95%, to 31,535.51, the S&P 500 gained 90.67 points, or 2.38%, to 3,901.82 and the Nasdaq Composite added 396.48 points, or 3.01%, to 13,588.83.
The much-anticipated COVID-19 relief bill was passed in the U.S. House of Representatives on Saturday, and now moves to the Senate.
The pan-European STOXX 600 index rose 1.84% and MSCI’s gauge of stocks across the globe gained 2.01%.
Emerging market stocks rose 1.71%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.83% higher, while Japan’s Nikkei rose 2.41%.
Reports on manufacturing and factory activity showed strength in many developed economies on Monday, including a three-year high in the United States, which could keep inflation concerns on the radar.
Major sovereign bonds rallied on Monday as markets showed further signs of stabilization after their worst monthly performance in years.
Expectations of economic recovery and rising inflation boosted global benchmark bond yields in February to their biggest monthly rises in years. But the expected run-down of U.S. Treasury balances at the Federal Reserve has held down shorter-dated rates.
Benchmark 10-year Treasury notes last rose 8/32 in price to yield 1.429%, from 1.456% on Monday.
The coronavirus pandemic laid bare weaknesses in the financial system that should be addressed with new rules to prepare for the next shock, Fed Governor Lael Brainard said.
“We should not miss the opportunity to distill lessons from the COVID shock and institute reforms so our system is more resilient and better able to withstand a variety of possible shocks in the future,” Brainard said.
Gold prices rose as the retreat in U.S. Treasury yields helped to bolster its status as an inflation hedge, but a firmer dollar limited bullion’s advance.
Spot gold dropped 0.5% to $1,724.06 an ounce. U.S. gold futures fell 0.45% to $1,720.40 an ounce.
The dollar index rose to a three-week high as investors bet on faster growth and inflation in the United States, while the Australian dollar gained after Australia’s central bank increased its bond purchases in a bid to stem rapidly rising yields.
Bitcoin rose 6.70% to $48,719.02, with Citi saying the most popular cryptocurrency was at a “tipping point” and could become the preferred currency for international trade.
Goldman Sachs has restarted its cryptocurrency trading desk, a person familiar with the matter told Reuters.
U.S. crude recently fell 1.77% to $60.41 per barrel and Brent was at $63.45, down 1.51% on the day on fears that Chinese oil crude consumption is slowing and that OPEC may increase global supply following a meeting this week.
(GRAPHIC – Germany 10-year: https://fingfx.thomsonreuters.com/gfx/mkt/jbyprddzype/Germany%2010-year.png)
(Reporting by Suzanne Barlyn; Editing by Lisa Shumaker and Sonya Hepinstall)
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