We are delighted to inform our clients on the accessibility of trading stock CFDs starting April 10, 2018, Tuesday. This exclusive asset class is our latest additional offering among others that will soon be available on our MT5 platform.
Exclusive Change Capital, as an Investment Firm incorporated under the laws of Cyprus with registration number: HE 337858, proudly announces the acquisition of its license number CIF 330/17.
Our company proudly announces the acquisition of its Portfolio Management licence as of April 16, 2018. This licence endeavours our ongoing attempts in the provision of quality and high-ended services in a wider spectrum.
Exclusive Capital is delighted to announce that Marshall Gittler, Chief Investment Strategist for ACLS Global, will be consulting with our portfolio investment team and contributing his FX commentary to our website. Mr. Gittler is well known as a strategist, investment specialist, and economist, with decades of experience working for the major investment banks in Europe and Asia.
Exclusive Change Capital Ltd. is pleased to announce that it has received the International Quality Certification ELOT EN ISO 9001:2015. This certification is addressed to organizations that wish to ensure their ability to provide products and services that meet customer requirements and comply with the legal framework.
We would like to congratulate the young Cypriot athlete Petros Englezoudis on having a great athletic year and becoming a Youth Champion in Skeet Shooting 2019.
As the latest situation in the Middle East has become one of the most recently discussed topics, our Head of Investment Research Vrasidas Neofytou will analyse the geopolitical developments on RIK1 TV program «Απο Μερα σε Μερα» on Wednesday, September 18th at 12:20 pm.
Since 2012 the Finance Magnates’ London Summit has been the leading event for professionals within the financial industry.It is a superb meeting place for finance-oriented individuals, entities, and organizations, such as liquidity providers, marketing specialists, brokers, and banks for educational and networking purposes.
It was our pleasure to be a part of three magical evenings in Episkopi Village, Limassol supporting the charity Christmas Village activities which took place from the 20th till 22nd of December, 2019.
Following a great effort from Exclusive Capital's management team to reduce smoking among employees during 2019, the company`s directors have decided to grant additional 5 days paid annual leave as a reward to those employees who make an effort not to smoke or to quit smoking.
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At Exclusive Capital our portfolio management team is carefully selected based on sophisticated knowledge and vast experience. Our capabilities offer robust portfolio management services.
Exclusive Capital takes an innovative approach in delivering returns by utilizing investment strategies in private equity, venture capital, tangible assets, and extensive alternatives.
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Russian citizens voted for constitutional amendments that could allow President Vladimir Putin to remain in the Kremlin until 2036.
A seven-day vote which ended on Wednesday July 1st , resulted to nearly 78% of Russian voters backing the constitutional reforms, while the 22% voted against the reform package.
The reforms which are more than 200 changes include a permission for Putin to seek two additional six-year terms as president, after his current term runs out in 2024, banned same-sex marriages and prohibited senior government officials from holding foreign passports, residency or overseas bank accounts.
President Vladimir Putin aged 67 which has been in power in Russia, either as prime minister or president for the last 20 years, could stay in his position up to the age of 84.
Both Russia’s houses of parliament have already adopted the changes, but President Putin ordered a public vote in a bid to legitimise the reforms. It was delayed since April due to the coronavirus outbreak.
However, several hundred opponents of the constitutional changes staged public protests in Moscow and St. Petersburg, criticising the poll as illegitimate and lacking transparency.
Apple is planning to exclude two familiar accessories in the box of the upcoming iPhone12 model: the power adaptor and Apple’s wired headphones, and it will even remove the power adaptor from the new iPhone SE’s packaging later this year.
The company will not include these accessories to keep the final price of the next iPhone 12 at a similar price to the current iPhone 11 model. Apple will attempt to offset the additional costs resulting from upgrading the iPhone 12 model’s range to 5G, the first Apple smartphone to come with 5G support.
Furthermore, Apple’s designers are planning to create a smaller packaging, which would be more eco-friendly, reducing the shipping costs, since more phones could fit into a single shipment.
Apple is likely gearing up to launch the new iPhone in the fall, since the company has launched new iPhones in September or October every year since 2011. A successful launch of the new devices, which account for over half of Apple’s revenue, is critical for the company. The company released a new version of the iPhone SE this spring.
Other than 5G connectivity, Apple’s iPhone 12 is expected to come with a new design that resembles the iPad Pro’s aesthetic, a Lidar sensor like the one found on the iPad Pro, and a new, smaller size option.
Finally, Apple will release a new 20W charger that will be sold separately as an optional accessory, which would be larger than the 5W and 18W power adapters currently sold with Apple’s iPhones.
The Shanghai Composite index-CSI 300 finished the last session of the week with 2% in profits, gaining support from the improved Chinese Services PMI data and on signs for a faster recovery of the local economy after the pandemic fallout.
Coronavirus Update: Global cases: More than 10.84 million Global deaths: At least 520,785 Countries with most cases: United States (more than 2.73 million), Brazil (more than 1.49 million), Russia (more than 660,000), India (more than 604,000) and Peru (more than 292,000).
Asian Market Reaction: The CSI300 index ended Friday at a five-year high, posting its biggest weekly gains of nearly 10% since October 2015, while Hong Kong’s Hang Seng index followed with 1% gains.
Fig.01: CSI 300 index, Weekly chart
The Chinese indices gained support this morning after the release of a private survey showing that China’s Services sector grew at its fastest pace in over a decade in June. Specifically, the Caixin/Markit Services Purchasing Manager’s Index (PMI) came at 58.4 for the month, much higher than May’s 55. The 50 level in PMI readings separates growth from contraction monthly.
Fig.02: Hang Seng index, Daily index
The CSI300 index surged nearly 30% since it had its pandemic-related bottom on March 20th , gaining support from the massive fiscal and monetary policies from the Chinese government, and the re-opening of the local economy since early April.
Furthermore, investors feel more confident that the Chinese government has the ability and knowledge (based on the previews virus outbreak of SARS), to crush any resurgence of the COVID-19 in the country.
Fig.03: Nikkei 225 index, Daily chart
Meanwhile, the rest of the Asian markets finished the week higher, with the Japanese Nikkei 225 and South Korea’s Kospi indices leading the gains with 0.8%, while the Australian ASX 200 finished with 0.4% gains.
Over the past several months markets have seen unprecedent volatility and economic carnage that has not been seen for 70-80 years. For starters, the COVID19 pandemic has frozen the world economy and both companies and governments face unprecedent revenue shortfalls. Initially markets corrected, but have since recouped most of their losses, on the back of both fiscal and Central Bank stimulus.
Is the current rally overstretched?
The answer is yes. Overall markets have had a very good run from their recent bottom, and as of the writing of this article seem to be in correction mode. Central Banks have a great deal to do with the current rally, having created about $7 trillion in liquidity.
However please keep in mind that Central Banks are not done nor are governments around the world providing fiscal stimulus. The question is, will markets require further Central Bank intervention to go higher? We don’t know, but currently Central Banks are on pause, and markets seem to have consumed the current sugar high liquidity.
Are markets mispriced?
The answer is yes and no. While It’s true that the current multiple of the S&P 500 Index is above historic norms, at the same time it is also true that the massive liquidity created by Central Banks has side-effects.
As depicted from the chart above, the current trailing PE of the S&P 500 Index is about 23. Yes, this is a little rich, but in no way a bubble.
The above chart depicts the PE of the S&P 500 over the past 40 years or so. Believe it or not the average PE over these 40 years is actually higher than what it is today.
My theory is that the multiple of the entire market will probably be elevated going forward. Yes, this is still a theory, because it will take several years before it is confirmed (and if), however Central Bank liquidity never really unwinds, for us to get to a pre COVID19 liquidity level. As such, I think that investors will eventually discover that the new norm will be a higher multiple for the S&P 500 Index.
So yes, valuations are elevated, however I am not convinced we are in a bubble, as many pundits point out.
The Dollar problem
In order to understand the dynamics that drive the dollar, investors need to dive deep into the reasons for dollar demand, that have nothing to do with the US economy. In fact, one of the reasons why betting on the twin deficits in the US has never played out, is because the value of the dollar in FX markets has little to do with the US economy.
Currently there are about $12 trillion dollars of outstanding dollar denominated debt outside the US banking system. Dollars are also needed to pay interest on these loans, and dollars are needed for rollovers and new debt issuance.
About 80% of global trade is conducted in dollars. So, as the world economy grows, more and more dollars are needed. US multinationals also increase the value of the dollar. Every time Apple sells an iPhone, the revenue is converted into dollars and deposited in a NY bank no matter what currency the sale was made in.
The problem is that the only way for the world to procure an ever-increasing amount of dollars, is from the US, primarily via a US trade deficit. So the trade war is not only bad for the world, but it is also bad for the US, because if the US deficit shrinks, it means less dollars around the world, that drives up the value of the dollar, despite the twin deficits.
When the Fed first announced it was opening up new swap lines with central banks around the world, my first thought was that this was bearish for the dollar, because it would lift the pressure in the FX market of procuring dollars around the world. Also, I was expecting swap liquidity to surpass the 2008 crisis, and perhaps extend to over $1 trillion.
Well that did not happen (so far). After reaching about $450B, swap liquidity has now retreated to around $275B. I was very surprised by this. Could it be that the dollar shortage problem is not what we thought? Difficult to tell, however even if the problem has been fixed in the short term, the problem will not go away long term.
But question remains, how did swap liquidity unwind so fast? One theory is the Fed balance sheet.
Could it be that the Fed’s $3 trillion in balance sheet expansion has been enough for the global economy to procure the dollars it needs? Difficult to tell, however it is the only theory I have at the moment.
Bottom line
Equities have bounced as a result of central bank liquidity, as has always been the case in the past.
Markets now have a higher multiple, however I do not think this is something short-term. While it is still early to tell, I think that valuations will be permanently elevated, and a new higher PE for the S&P 500 Index will be the new norm.
Liquidity cannot be unwound, because eventually it gets backed in the world economy. Do not look for central banks to unwind their balance sheets
Finally, for the time being it seems that the market has enough dollars, as evidence that swaps are being unwound.
A lower dollar is bullish for equities, a stronger dollar means tightened financial conditions, and the market goes to risk off mode.
There are many uncertainties going forward, the biggest being how countries around the world will deal with the continuing problem of COVID19, and what might happen if we get an even second bigger wave of cases comes along.
While I do not think we will see total lockdowns as we witnessed for the past several months, partial lockdowns seem possible.
I also do not think markets will retest their lows. The main reason is that a lot of forced selling has been done already. It’s difficult to see market retesting their lows, without a new wave of forced selling.
Uncertainty will remain with us for a while, and it is probably the only sure thing market participants have to look forward to. There are simply too many hot spots investors need to navigate going forward. COVID19, the price of oil, elevated multiples, trade wars, high volatility and the US election are just a few. The only certainty is that uncertainty will be with us for a while.
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