It is no secret that investors seem to be re-engaging with the FinTech sector, with global interest rates set to fall and investors looking for growth opportunities. Southeast Asia is a hive of FinTech companies, leading the world in a range of different technology based products and services. Unsurprisingly, a recent report by UnaFinancial suggests significant short to medium term growth in the Southeast Asia financial technology sector.
While the Japanese economy is improving and we are on the verge of moving from negative to positive interest rates, there are still many challenges ahead. We know the Bank of Japan is on the brink of increasing interest rates for the first time since 2006, but they need to appreciate the broader repercussions.
Recently, we have seen a lot of press coverage on the Indian and the US stock markets, both of which have been booming. In fairness, the Japanese stock market recently hit an all-time high, but this was after 34 years and in real terms, it is much different.
Those who follow the APAC region will be aware of Japan’s thriving stock market, exceeding the previous all-time high after a 34-year wait. Bizarrely, while interest rates are still in negative territory and economic concerns prevail, we are seeing stock-market valuations last seen before many of the batch of current traders were even born. We also know that only a fraction of Japanese household cash reserves are invested in the market, leaving potentially huge upside even from these record highs.
The old Oracle of Omaha has done it again, spotting an arbitrage opportunity when the Japanese stock market began to show signs of life. While this man has built his entire fortune on value, value and better value, this is the first such arbitrage situation to emerge in Japan for many years. With a mixture of improved performance and investor perceptions, Warren Buffett is now sitting on a significant return.
As the Ukraine/Russia war continues and friction emerges across the Middle East, it is important to be aware of geopolitical risks and their impact on global markets. As we have seen in the past, they can significantly weaken the global economy, which then filters down into national economies and specific sectors.
It is easy to discount ongoing demographic changes as something for the economists, governments and regulators to worry about. In reality, changing demographics can have a significant impact on investment markets and investment trends. We know that an ever-strengthening APAC economy impacts various areas of everyday life and, ultimately, long-term investment.
Expectations that interest rates will begin to fall relatively soon have seen some emerging markets experiencing an easing of the financial constraints in the bond markets. We thought it would be interesting to look at some of the leading APAC and emerging countries, noting their current S & P credit ratings and recent movements.
The global futures and options market has grown considerably over the last 50 years and, in many cases, created situations where the “tail is wagging the dog”. The power and influence of these markets are enormous, and while often accused of fuelling speculation, there are ways in which you can use these instruments to protect your portfolio.
In bull markets, investors tend to focus on equities and the potential for long-term capital growth and an increase in income. When markets turn downwards, or there is a degree of volatility and uncertainty, non-traditional investments, known as alternative investments, will often come into play. They offer a different angle and investment strategy; in some cases, they can provide a degree of protection.
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