Market Commentary

When looking at your portfolio of investments, it is sensible to look at diversification as a means of spreading the risk. As a consequence of the Internet, it is now possible to deal in global markets at the touch of a button. Many people have used this new route to global investment but do you need to go international?

Those undertaking a global investment strategy today must consider investing in Hong Kong and China. Just recently, Hong Kong celebrated the 25th anniversary of the return of sovereignty to the People’s Republic of China. While it is safe to say that opinion was mixed at the start, the economic and financial success of Hong Kong speaks for itself. 

As short-term/execution-only traders, it is easy to get caught in the moment and overlook the broader picture regarding investments and their historical movements. While trade execution is obviously critical and timing essential, it is also vital to have the courage of your convictions. As an execution-only trader, you must know historical asset price movements and how this may impact relative valuations and future movements.

As a trader, you require a degree of volatility when looking at a particular stock or sector. Automatically, many of us assume that technology shares must be the most volatile, but are they? The timing of your trade execution is a skill, but you need to find the right sector to give yourself a chance with short-term trades.

Those who follow the Hang Seng market will be aware there is a hefty weighting towards financial and IT stocks, creatingthe perfect scenario for FinTech. At the moment, there are 69 constituents of the Hang Seng index across a spread of sectors, although not a huge one. So how does this work out for execution only short-term/day traders?

The Chinese technology sector is at the centre of a new trend with companies now investing into in-house operations to create microchips built specifically around their requirements.ByteDance, the owner of TikTok, is the latest to announce plans to become a quasi-microchip manufacturer. Unfortunately, it is not simply a case of switching on the investment tap and creating a ready-made microchip, this takes time and detailed planning.

The Sri Lankan economy is in meltdown, the political system is broken, and the population growing more desperate each day. In addition, the president was forced to flee the country earlier this week when protesters stormed his residence. So, how did Sri Lanka get into this situation and could this prompt financial contagion?

Many experts are scratching their heads, unsure how the Malaysian FinTech market has so far failed to grab a meaningful share of the Islamic finance market. This is a country where Islamic finance assets represent 35.5% of total banking assets – equating to circa $270 billion at the end of 2021. So why is the usually innovative and fast-moving FinTech market struggling to make an impression?

Hong Kong is widely seen as the international gateway to China, with systems such as Connect also allowing Chinese companies to tap into global funding opportunities. The combination of a strong financial sector, upbeat insurance industry and technological innovation has created a perfect storm. European insurance companies, with Irish groups particularly active, are now looking to tap into the APAC insurance markets.

While Sri Lanka confirms expected default on sovereign debt repayments there are high hopes for frontier markets such as Vietnam, a technical default by Sri Lanka on sovereign debt obligations will act as a wake-up call to many. Confirmation that Sri Lanka has exceeded the 30 day grace period formissed interest payments has seen debt rating agencies update their advice. Even though this move was not unexpected, confirmed by the Sri Lankan government last month, there will still be repercussions.