Economic digest 16.04.2021
FINANCIAL NEWS
ASIAN STOCK MARKETS
China’s Shanghai Composite was up 0.24% by 11:10 PM ET (3:10 AM GMT) while the Shenzhen Component was down 0.35%. Economic data released earlier in the day was also mixed, with the GDP for the first quarter growing 18.3% and 0.6% year-on-year and quarter-on-quarter respectively in March. Both figures were lower than forecasted, with economic growth soaring from a year earlier but slowing down quarter-on-quarter. Meanwhile, industrial production grew 14.1% year-on-year.
Hong Kong’s Hang Seng Index inched up 0.07%. The city’s government said on Thursday that it would open its COVID-19 vaccination program to those aged between 16 and 29, with registration to commence in the following week.
Japan’s Nikkei 225 edged up 0.16%, even as an uptick in COVID-19 cases in the country could lead to the cancellation of the Tokyo Olympics, now less than 100 days away.
South Korea’s KOSPI inched down 0.05% and in Australia, the ASX 200 was down 0.35%.
DOW AND S&P RECORDS
The S&P 500 scored its second closing high this week, and the Dow surpassed its previous peak on April 9. The Nasdaq Composite (.IXIC) finished above 14,000 for the first time since Feb. 16 and is now down less than 1% from its Feb. 12 record high ending.
The S&P information technology (.SPLRCT) sector also hit an all-time high. The benchmark and the communication services (.SPLRCL) index were buoyed by big tech names, including Apple Inc (AAPL.O), Microsoft Corp (MSFT.O) and Facebook Inc (FB.O), which gained between 1.5% and 1.9%.
After Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N) and Wells Fargo & Co (WFC.N) kicked off reporting season on Wednesday with bumper results, Bank of America (BAC.N) and Citigroup Inc (C.N) also offered optimistic views on an economic recovery in their earnings reports on Thursday. However, their shares declined 2.9% and 0.5%.
The Dow Jones Industrial Average (.DJI) rose 305.1 points, or 0.9%, to 34,035.99; the S&P 500 (.SPX) gained 45.76 points, or 1.11%, at 4,170.42; and the Nasdaq Composite (.IXIC) added 180.92 points, or 1.31%, at 14,038.76.
LIFE AFTER IPO
Shares of AppLovin Corp. ended their first day of trading down 19%, after the mobile-apps company raised $1.8 billion in its initial public offering.
The company’s stock closed at $65.20, compared with its IPO price of $80 a share. The Silicon Valley-based company is valued at more than $25 billion, based on its closing price Thursday.
AppLovin makes tools for developers of smartphone apps to improve marketing and revenue. It also runs more than 200 of its own mobile-game apps.
The two sides of the business are complementary, Chief Executive Adam Foroughi said, because the data that AppLovin gleans from how users play its games yields insights that its enterprise customers can use to market their apps.
INCREASING EUROPE
European stocks hit a record high on Friday after strong U.S. and China data spurred optimism about a speedy global recovery, while strong results from Germany’s Daimler (OTC:DDAIF) boosted carmakers.
The pan-European STOXX 600 index rose 0.3%. The German DAX gained 0.6% to hit an all-time high, while UK’s FTSE 100 was up 0.4%.
German car and truck maker Daimler rose 2.5% as higher vehicle prices and strong demand in China helped it post a better-than-expected surge in quarterly operating profit.
Bank of Ireland jumped 6.5% to the top of STOXX 600 after it reached a deal with Belgian financial group KBC to explore the sale of most of KBC’s Irish unit.
NEWS FROM INDIA
India stocks were higher after the close on Friday, as gains in the Healthcare, Consumer Durables and Power sectors led shares higher.
At the close in NSE, the Nifty 50 added 0.25%, while the BSE Sensex 30 index added 0.06%.
The best performers of the session on the Nifty 50 were Wipro Ltd (NS:WIPR), which rose 8.94% or 38.50 points to trade at 469.20 at the close. Meanwhile, Hindalco Industries Ltd. (NS:HALC) added 4.65% or 16.45 points to end at 370.00 and UltraTech Cement Ltd (NS:ULTC) was up 2.69% or 175.90 points to 6715.20 in late trade.
The worst performers of the session were JSW Steel Ltd (NS:JSTL), which fell 1.54% or 9.70 points to trade at 619.40 at the close. ICICI Bank Ltd (NS:ICBK) declined 1.43% or 8.25 points to end at 566.95 and Larsen & Toubro Ltd (NS:LART) was down 1.13% or 15.50 points to 1359.15.
The top performers on the BSE Sensex 30 were Asian Paints Ltd. (BO:ASPN) which rose 3.07% to 2665.80, UltraTech Cement Ltd (BO:ULTC) which was up 2.43% to settle at 6696.05 and Oil And Natural Gas Corporation Ltd (BO:ONGC) which gained 2.19% to close at 107.30.
The worst performers were ICICI Bank Ltd (BO:ICBK) which was down 1.55% to 566.60 in late trade, Larsen & Toubro Ltd (BO:LART) which lost 1.09% to settle at 1359.70 and Bajaj Finance Ltd (BO:BJFN) which was down 0.94% to 4616.55 at the close.
Rising stocks outnumbered declining ones on the India National Stock Exchange by 972 to 665 and 75 ended unchanged; on the Bombay Stock Exchange, 1594 rose and 1195 declined, while 150 ended unchanged.
NEW ALLOTMENT STATUS
Macrotech Developers, which was earlier known as Lodha Developers, finalised its share allotment on Friday. You check if you received the sarees on not by visiting either BSE website of the portal of its registrar.
The issue was subscribed 1.36 times. The Rs 2,500-crore issue received bids for 4,94,64,480 shares against 3,64,18,219 shares on offer, as per NSE data.
The portion meant for qualified institutional buyers (QIBs) was subscribed 3.05 times, non-institutional investors 1.44 times and retail individual investors (RIIs) 40 per cent. The price range for the offer, which hit the capital market on Wednesday, was fixed at Rs 483–486 per share.
Analysts were mixed on the issue given the high debt level of the company and negative cash flows. Low interest in the grey market also kept retail investors largely away from the issue.
CYBER IPO
The British company Darktrace, specializing in cybersecurity, announced plans for an initial public offering in London. It became the first company to plan a major listing on the London Stock Exchange after the failed placement of Deliveroo shares, according to Bloomberg.
During the IPO, Darktrace may receive a valuation of $ 3–4 billion, according to Bloomberg sources. During the listing, the company plans to sell at least 20% of the shares. It is expected that the securities will be traded on the premium market of the London Stock Exchange and may be included in the calculations of the FTSE stock indices, the company said in a statement.
Darktrace is preparing for an IPO from the end of 2019. It was then that she first announced her intentions and began the search for a CFO. In 2018, the company raised about $50 million and was valued at $1.65 billion.
CRYPTOCURRENCY: HOW IS´S GOING ON WITH BITCOIN?
Bitcoin fell early on Friday, after Turkey’s central bank decided to ban the use of cryptocurrencies for payments from the end of the month.
The Central Bank of the Republic of Turkey (CBRT) cited a number of reasons for the ban, including a lack of “supervision mechanisms” and “central authority regulation” for crypto assets.
It said that market values can be “excessively volatile,” adding that digital wallets can be stolen or used unlawfully and that transactions were irrevocable.
The benchmark cryptocurrency BTCUSD, -4.72% slipped 4% to $60,902, after reaching all-time highs above $64,000 earlier this week ahead of crypto exchange platform Coinbase’s COIN, -1.68% initial public offering. Ether ETHUSD, -5.53%, the world’s second-most prominent crypto, also fell 3.9%.
“Payment service providers cannot develop business models in a way that crypto assets are used directly or indirectly in the provision of payment services and electronic money issuance, and cannot provide any services related to such business models,” according to the new regulation.
The CBRT said it had taken the decision amid a rise in the use of crypto assets to make payments.
Last month, Tesla Chief Executive Elon Musk said Americans could now buy a Tesla with bitcoin and that people outside the U.S. would be able to do the same later this year. Electric-car maker Tesla TSLA, +0.90% said it acquired $1.5 billion worth of bitcoin in February, announcing plans to also use it as a form of payment. Online payments service PayPal PYPL, +2.54% also started letting U.S. customers purchase items with cryptocurrencies at the end of March.
But the CBRT said crypto asset payments came with “significant risks.”
“It is considered the use in payments may cause nonrecoverable losses for the parties to the transactions due to the above-listed factors and they include elements that may undermine the confidence in methods and instruments used currently in payments,” it said.
Turkey isn’t the only country looking to take tough measures on digital assets. India is reportedly set to propose a law banning cryptocurrencies and making trading or even holding assets punishable with a fine. The bill was included in a government agenda in January, which also referenced plans to create an official digital currency issued by the Reserve Bank of India. “The bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” according to the agenda.
ETHEREUM SETS NEW RECORD HIGH
Ethereum just crossed $2,500 for the first time in its history. The second-ranked crypto has enjoyed a parabolic run in recent months, fuelled by growing interest in the digital currency space.
Ethereum has fared particularly well over the last few days; it’s up over 25% in the last week.
Various other assets have soared amid heated market conditions. DeFi staples like Aave, Uniswap, and Synthetix all jumped in price today. Binance Coin, Ripple, and Cardano also hit new highs throughout the week. But the biggest gainer has been Dogecoinn, which is trading at $0.18 after a 200% rise this week.
Aside from the ongoing bull run, Ethereum has had various notable developments that have helped its surge this year. The blockchain successfully completed its Berlin hard fork (though there was a brief setback shortly after the event, involving a consensus error at block 12,244,294). Ethereum’s next major upgrade is happening this summer, when the long-awaited EIP-1559 “ETH buyback” proposal will ship as part of its London hard fork. After that, the move towards Proof-of-Stake is expected to follow sometime later this year.
At $2,500, Ethereum’s market cap is now over $288 billion. That’s more than Intel (NASDAQ:INTC), Toyota (NYSE:TM), and Netflix (NASDAQ:NFLX).
CRYPTO WHALES FOR RIPPLE
A few weeks ago, Born2Invest reported Ripple’s possible comeback as it moved toward the $1 mark. Today, Ripple sits over the $1.7 mark, and it’s a significant event since Ripple’s latest controversy.
Nevertheless, we must focus on the whale behind the article. Decacorn, a fintech company, moved 746 million in XRP via Ripple’s ledger. It’s an understatement to say that the transaction caught investors’ eyes.
By the time of the report, the movement was equivalent to over $407 million. Today, after XRP’s value grew over three times, it’s nearly a $1.3 million transaction. The transaction was between two of Decacorn’s crypto wallets.
Since the lawsuit, the SEC has complained that Chris Larsen, Ripple’s co-founder, keeps trading XRP.
Naturally, we can’t say that this transaction was responsible for Ripple’s growth. However, seeing crypto whales still interested in cryptocurrency strengthens confidence in XRP.
About a month after the SEC’s lawsuit, Ripple shows no signs of stopping. Initial fears about XRP’s ability to overcome this setback have subsided. Since then, the company has signed over a dozen contracts with different financial institutions. At the time of writing, Ripple touched the $1.8 mark and shows no signs of stopping.
Ripple’s main advantage is that it doesn’t try to be another cryptocurrency. It’s a prominent player in making cryptocurrencies accepted by traditional institutions.
