Vietnam Markets
Trading closed out yesterday at 1,339 points on the VN Index, so a stagnated week overall with only a 7-tick difference. Pressure will remain on this market into the 4th quarter.
There has been a consistent miscalculation of GDP forecasts in Vietnam and the reality. The forecasts prove repeatedly that they need to be taken with a pinch of salt. Naturally there will be a drag on Vietnams GDP so price that in.
Elsewhere
China certainly isn’t slowing down on its authoritarian, totalitarian, surveillance state and dictatorship rule. Pick one yourself, but all apply. The latest pearl of wisdom to come out of China is a continuation of the crackdown on all areas of life. China’s ongoing crackdown on the country’s entertainment industry stepped up a notch last Thursday after the state media regulator called for the boycott of “sissy” boy bands and effeminate men on television, the end of reality talent shows and a ban on vulgar social media influencers among a raft of other measures. Certain big names have already been wiped off the face of the earth essentially with a removal of all references to them on the internet and even scrubbed from any credits on film and TV shows. (Zhao Wei & Zhang Zhehan the actor/ess are prime examples). The likes of Jet Li and Jacky Chan probably should also be worried as they seem likely to be targeted just for having second passports!
I offer second citizenship in 18-countries, and it is widely reported and known that a huge amount of the Chinese population has applied, and been granted, second citizenship somewhere even though it is illegal in China. I expect that run to continue for those fortunate to be in a position and able to apply.
Naturally I have no interest in listening to modern ‘boy bands’ in China (I’m more of an old skool Red Hot Chili/Nirvana/Amy Winehouse kind of guy. No ‘sissys’ in there) but there are a whole generation of screaming teenagers that do, and they like to spend their pocket money/earnings on all things connected. It’s as old as time. Remember Beatles Mania as one of the original boy bands or the Beach Boys on the other side of the pond, and the swooning screaming lunacy that followed them? Somethings just never change.
From a markets perspective this will have a knock-on effect which many will not have considered. It is one thing to smirk or raise an eyebrow to all of this but consider the total revenue of China’s entertainment and media industry by the end of 2021 will be approximately US$358.6bn and reach roughly US$436.8bn by 2025. Now take out all those cancelled reality TV shows, aired concerts, talent-shows and you have just wiped-out billions in lost revenues. Would you be wishing to hold any of those media companies right now? Probably not. Check your portfolio and drop them like a hot potato.
It isn’t all unusual or bad news from China. August exports data absolutely smashed expectations with a 25.6% rise YoY and a rise from the 19.3% in July. A very impressive rebound from a recent Covid slump.
Cryptos – The love/hate relationship continues
The value of the world’s cryptocurrencies plunged to a low of about $1.9 trillion yesterday, wiping off nearly 15% in less than 24 hours. Reflecting a loss of more than $410 billion. The roulette table of betting on black or red continues for investors in cryptos. But as I have always maintained, that is exactly what cryptos are. Nothing more than a gamble, a punt. Any asset that can not have its actual value calculated is speculative. It is driven by market sentiment only and should be approached with a certain amount of caution and consideration as to whether this is the right asset class and investment tool for you.
So why the recent slow climb in value before the battering yesterday? Almost certainly it is to do with the petri dish experiment that El Salvador has allowed itself to become. It is the first country to make Bitcoin legal tender and that just went live. The Government itself bought about 25 million USD of coins and there have been major glitches in the immediate rollout. This an experiment that will be widely watched around the world. In a country where 70% of the population have no access to normal financial tools and a little over 50% have access to the internet. Many of those with access have spotty internet access at best. It naturally remains to be seen how the effects of this experiment will pan out. There have been demonstrations on the streets, and you do have to wonder if a currency such as crypto is ready for the general population as a legal tender, given its volatility. Can the poorer in the community take in their stride a 15% drop in a day? Of course not.
Naturally any news like this always has a rise in the run up to the event and then collapses straight after. “Buy the rumour, sell the fact”. If you aren’t familiar with that term, I suggest you look it up as it stands true repeatedly. Even more so in speculative assets.
I do own a basket of cryptos and have done so since 2017. I bought them knowing it was a punt and only bought what I was willing to lose. I am fortunately up, and I will continue to hold them for the longer-term. But this is NOT for the weak hearted and should only be a small part of a portfolio. If you are looking for short-term gains, then you may be in for a bit of a bumpy ride.
There is a very valid reason why the expression “Don’t put all your eggs in one basket” was first coined around 1710. That is over 300 years of experience being passed down through the generations and yet still, it is unfortunate that it isn’t listened to and adhered to. Diversity always wins through in the end. Have your betting money and have your safety net in place. Greed is the biggest killer in financial planning.
Have some cryptos and perhaps even venture out into the NFT’s market if you know what you are doing. But spread it out and have exposure to lots of asset classes as well. Stocks, bonds, money markets, real estate. Spread the love around. Unless of course you are OK with 15% movements in a day that keeps occurring! If you aren’t and you need help, then come and talk to me and I will assist you. Lawrence.young@holbornassets.com
Other Global Market News
▪ The Confederation of British Industry (CBI) has urged the UK government to relax its immigration rules to allow in more foreign workers and ease labor shortages caused by the coronavirus pandemic and Brexit.
▪ According to a report published by IHS Markit, the UK construction sector grew at the slowest pace since February, as “sustained, and severe, supply chain disruption” hit building firms, and drove up costs sharply.
▪ Research group Sentix’s index of eurozone investor confidence has dropped to 19.6 points in September, the lowest reading recorded in the last five months.
CURRENCIES – MONETARY POLICIES
▪ On Monday (06.09) sterling dropped against the US dollar, coming in at $1.38. Economists at MUFG noted in a report that the pound’s underperformance is unlikely to persist and suggested that the cable (GBP/USD pair) would hit $1.40 by the end of the year.
▪ The euro lost ground, trading around $1.18 (-0.26%) against its US counterpart on Monday (06.09). I suggest that the pair could head higher towards $1.19 on a hawkish message from the European Central Bank after its board meeting later this week.
▪ The US Dollar Index (DXY) edged higher on Monday (06.09), coming in at 92.26. Investors continue to digest Friday’s Nonfarm Payrolls disappointing report and will be focusing on Thursday’s ECB board meeting.
STOCK MARKETS
▪ On Monday (06.09) the Nikkei 225 in Japan gained 1.85%. The Shanghai Composite Index surged 1.12% while the Hang Seng Index soared 1.06%.
▪ The FTSE 100 gained 0.68% (7,187.38) on Monday morning (06.09). In Germany, the DAX 30 was up by 0.62% (15,879.51), while in France, the CAC 40 climbed by 0.69% (6,735.77).
METALS
▪ The price of gold lost ground on Monday (06.09) reaching $1,824 per ounce. After gaining more than 2% in the previous week, gold advanced to its strongest level since early August.
Get in touch with Vietnam’s Leading Wealth manager for more information or advice on any of the following. All consultations are naturally FREE to members of this group.
By Lawrence Young | lawrence.young@holbornassets.com