Message from Coach
On this week’s market summary:
📍1. The Bank of Japan is to buy $6bn from the country’s national foreign exchange reserves in an unusual move to boost the central bank’s US currency holdings. The BoJ said it would make its first-ever outright purchase from the Ministry of Finance at some point between now and the end of March 2021, at the prevailing exchange rate when the transaction takes place. The central bank’s decision may signal that it intends to step up its longer-term lending of foreign currency to domestic banks, although bank officials insisted, they had no immediate plans to use the dollar cash.
📍2. Investment bankers could draw record fees from equity deals involving Chinese companies in 2020, underscoring global finance’s growing dependency on the country even as geopolitical tensions rise. Lenders based outside of China have earned $1.73bn of revenues this year from selling shares in Chinese groups on bourses in New York, Hong Kong and mainland China, up 113 per cent from a year ago, according to data from Dealogic. That puts them on the verge of surpassing the $1.77bn in fees earned in 2010. The growth in revenues from these deals comes on the back of a banner year for primary and secondary listings by Chinese companies, which have raised a record $132.3bn, or 38 per cent of all global equity fundraising in 2020.
📍3. The Federal Reserve has said it will keep buying at least $120bn of debt per month until “substantial further progress has been made” in the recovery, strengthening its support for the US economy amid a surging coronavirus outbreak. The guidance from the Federal Open Market Committee came at the end of a two-day meeting during which Fed officials upgraded their economic projections but maintained predictions that they would keep interest rates close to zero until at least the end of 2023. The language on debt purchases mirrors the Fed’s pledge to keep interest rates close to zero until the economy reaches full employment and inflation is on track to exceed its 2 per cent target for some time.
📍4. Dollar doom and gloom is in fashion. The broad dollar index is down about 10 per cent from mid- March. Most banks and forecasters expect the trend to continue, with some predicting that the greenback could fall 20 per cent or more in 2021. Were this a surety, it would have happened already, of course. And we know that it’s precisely when all the smart money is on one side of the market that there’s the greatest risk of prices moving in the opposite direction. Four arguments are made for why the dollar is poised to fall. First, as a safe-haven currency, the dollar strengthens when uncertainty spikes, as it did in March. Now, with the rollout of vaccines, the worst Covid-related uncertainty is behind us.
One of the must-ask interview questions for banking and finance is: “Have you read any news recently?”, with the follow-up questions: “How would you link this news to the market and what investment suggestions would you give to your clients based on this news?”
Showing your market sense and ability to provide feasible investment ideas would help to differentiate you from other candidates. Therefore, apart from the weekly news update / investment insights, we have also generated this Weekly Market Summary for you to have a quick understanding of the market development and tips to answer some hot discussion topics.
Take a look of the summary and WhatsApp us in the group if you have questions.