The Return of the Bears 🐻
Recapping activity within the markets this year 📉
2018 started with such promise, Global Markets were still revelling in their all time highs, the bulls were still powering ahead, cryptocurrencies were still… bubbling. Then came the corrections. Once dry January had ended, the markets got drunk again, leading to some violent scenes in February, the Dow and S&P witnessed their worst month in two years and the FTSE suffered its biggest fall since the Brexit vote. 🇬🇧☠️
Fast forward to October, and the ghosts & ghouls began to spook investors, leading to one of the worst months since the financial crisis, with nearly $2tn wiped off the S&P, and tech stocks in particular being badly hit. 👻
The West haven’t been the only ones to suffer however, Asian markets have fared no better, witnessing around $5.6 trillion wiped from their equity markets this year. China in particular has been badly affected, with the Shanghai Composite Index currently standing over 25% down YTD.
The selloff continues at the time of writing, with every analyst that has so far called the bottom being forced to eat their humble (christmas) pie, and with hoardes of investors seen retreating into cash and bonds, it’s almost certain that gains will remain in hibernation till 2019. 😴
State Street Launches into Space (stocks) 🚀👽
For the space lovers out there that are feeling down about not being able to get into SpaceX, State Street launched their Final Frontiers ETF for you to throw your interplanetary currency tokens at. The new ETF holds 31 stocks, nearly 69 percent of which are aerospace and defense stocks. XKFF’s top 10 holdings include Dow components Boeing Co. and United Technologies Inc. Fund fees are 0.45 percent per year for the new fund.
Nobody’s a Robot, Nobody’s Perfect 🤖
Robo advisors continued to gain popularity in 2018, with more retail investors taking a shine to them thanks to the streamlined adoption, hands free approach and lower fees. AUM increased over 126% to $540m Globally, with users estimated to have increased nearly 100%, and with financial giants such as Manulife looking to begin rollout to their 26 million global customer base, 2019 could be an exciting year for Robo growth.
Has the bubble popped? 💥
Hot on the heels of an insane year for Bitcoin (and the wider cryptocurrency market in general), traders were gearing up for another year of gains. Excitement was high following December 2017, Bitcoin peaked at just under $20k, Ether was rocketing towards $1k, ‘proper’ exchanges such as CBOE & CME launched Bitcoin futures trading just before the turn of the year, and Fintech 🦄 Revolut turned their first (and to date, only) ever monthly profit thanks to crypto traders.
The market has been steadily imploding throughout the year, with total losses in market cap around 80% across the board. Aside from the big boys of crypto, regulators have begun taking a firmer stance on their offspring, the SEC for example began categorising ICOs as securities offerings, and successfully penalised two companies for failing to register their tokens accordingly during their initial sale.
Merger Mania! 💸
It was an intense year for deals! The first 9 months of the year saw huge activity in the M&A space, with activity totalling $3.3tn worldwide, a 37% increase from the same period in 2017 and the strongest 9 months since records began back in 1980. 43% of this total was made up by ‘mega-deals’ (where the value of the M&A exceeded $5bn), a record high and more than double what we saw from the same period last year. The media sector saw some humongous deals that could have the largest impact on consumers:
- Disney fought off late competition from Comcast and won the 21st Century Fox merger with a $71.3 billion bid ✅
- AT&T finally secured approval for their $85.4bn purchase of Time Warner (despite the DoJ appealing) ✅
- Comcast closed the deal with Sky after a rocky year battling with Fox, splashing out $40 billion. Their deal was completed in November and saw Sky delisted from the FTSE along with a reshuffle to the board. ✅
The Trillion Dollar Apple 🍎
One of the most publicised stories of the year was Apple becoming the first $1tn public company back in August. After shaking off concerns about stagnating device sales, the stock powered past the $200 mark, closing at a record high of $207.39 on 2nd August before continuing to cruise all the way up to $233.47 in October. Since then Apple has been caught up in the tech rout, and is currently hovering around $150 at over a 10% YTD loss. 😬
Noone wants to buy houses, which is good because noone is selling them either 🏘
The UK housing market has had a bruising year, not exactly helped by the botched Brexit negotiations that have steered the country directly into the path of the no-deal iceberg, scaring off prospective buyers and sellers 🗻🚢
The numbers published by The Royal Institution of Chartered Surveyors are troubling:
- The number of buyers fell sharply by 21%, with this being heavily attributed towards Brexit uncertainty.. Noone wants to buy a house today that you might be able to buy in April at half the price!
- Lower demand means people are willing to sell at lower prices, evidenced in the key price balance, which slipped from -10% to -11% in November, the lowest reading in 6 years.
- The number of new properties being listed for sale fell to a net balance of -24%, with estate agents only having 42.1 homes for sale on average.
Despite all of this though, the average UK house price still rose 2.7% (as of the latest HPI report) up to £231,095, with the North West experiencing the greatest annual price rise of 4.9%, and London the worst affected, with the largest annual price fall of 1.7%.
#DeleteFacebook 💀
Continuing on the ‘it was a bad year for…’ theme, Facebook is up next. The stock is down -23.77% this year, and it feels like Zuck hasn’t been able to go from one week to the next without negative press driving the price further down. When you actually think about it though, it’s not surprising at all, there have been various scandals including Cambridge Analytica, Russian election meddling, rampant spreading of fake news, disappointing revenue and advertising projections, Sandberg in the Senate, Zuck in Congress, Instagram founders departing, massive security breach in September… God damn that’s not even all of them! The company has a big image problem, and it will have to work hard in 2019 to repair the heavy losses it (& the shareholders) have suffered this year, all $140bn of it, could it finally be time for Zuck to pass the torch? 👀
With Great Power, Comes Great Responsibility 🌱⚡️
Incorporating Environmental, Social & Governance (ESG) factors into investing has been steadily growing in popularity in recent times, more commonly referred to as responsible investing, it involves taking into account other non-traditional variables into financial analysis such as:
- The company’s approach and adaptability to climate change
- How they treat their employees and do they foster a positive culture
- How sustainable their business practices and supply chains are
After over 10 years of this practice being slowly adopted, reports from this year indicate that ESG investments now total $20 trillion in AUM Globally, that’s around a quarter of all professionally managed assets worldwide! George Kell, Founding Director of the United Nations Global Compact, wrote a great piece expanding on all of the above for Forbes back in July, it’s definitely worth a read to learn more about the amazing work being done by the PRI in this space.
It certainly has been a hectic year, and I’ve only scratched the surface! I’m looking forward to doing it all over again in 2019, but for now I hope you’ve enjoyed reliving some of the moments that stuck with me over the last 12 months. 👋🏼
