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6/26/2020 UNIT Monash Week 10 Newsletter: Accelerated Deglobalisation

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Weekly Newsletter

Semester 1, Week 10 2020

Hey !

We introduce to you the new look of the UNIT Monash newsletter!

We are continually trying to improve on how we can best meet your needs and provide relevant and useful

content for our valued members. To ensure this is the case, we now include a link at the bottom of the

newsletter for you to provide feedback to us. If you want us to cover a topic or want to tell us what you

think we are doing right, please fill it out! We want to thank you in advance for your contributions.

This week's newsletter includes an insight into the current state of globalisation and COVID-19's role in

accelerating deglobalisation.

Check out the week 10 newsletter below for more details!

Events

It is unfortunate that due to COVID-19 we are unable to host any in person events. However, over the next

couple of weeks we will be running a series of new events.

In Week 11 and 12, we will also be running our revision lecture series in the following units:

BFC2140: Corporate Finance 1

BFC2751: Derivatives 1

BFC3241: Equities and Investment Analysis

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BFC3540: Modelling in Finance

Stay tuned by following our Facebook Page here: https://www.facebook.com/UNITMonash/

Market Insights

Two-Faced FDIs & COVID-19’s Role in Accelerated Deglobalisation

The Financial Times (“The modern era of globalisation is in danger”, May 24) is right to argue “the current

era of globalisation is not dead but looks in ill health”. With the rise of populist nationalism such as UK’s

Brexit vote and the US election of Donald Trump in 2016, the COVID-19 risks deliver the knockout blow.

Every country will have to pay the price for increasing protectionism resulting in frailer domestic

production.

Click here to read more.

Sports Betting Pandemic

The global sports betting market was valued at approximately US $104.3 billion in 2017 and is expected to

reach US $155.49 billion by 2024. Although it is widely viewed as being a root cause of gambling-related

problems, there are many positive aspects to the industry.


Bitcoin Dominance and The Halving Event

The purpose of this article is to delve into why Bitcoin is the single most buzzed about cryptocurrency, to

discuss what Bitcoin’s halving entails, and how the past halvings have affected the global cryptocurrency

market.


Investing in Antique Violins Part 3 - Liquidity

This will be a three-part series that will reflect upon my own personal experiences collecting antique

violins, and the lessons I have learnt.


Commodities Call

To help paint the picture of how COVID-19 has impacted the commodity markets, we can compare it to

other major events such as 9/11 and previous recessions.


A Primer on Cryptocurrencies

The purpose of this article is to briefly delve into the exploding topic of cryptocurrencies – specifically the

financial and economic facets of this market.



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Weekly Global Breakdown

The Australian market had a strong week, with the ASX200 gaining 2.43% by the week’s end. The XJO

was expecting close higher by the end of the week until investors sold off their profits again from this

week's gains.

The banking sector led the stock markets this week, with growth of 11.13%. This considerable gain made

most investors sell out on Friday which made the sector fall 3.55% at close. The reason for this large

increase was primarily due to the $60 billion Jobkeeper blunder by the Australian government, originally

expected to be $130 billion. This was great news for the banks as there are less businesses which require

help, meaning that banks do not have to support as many people as expected. As a result, the banking

sector soared, with ANZ shares gaining 12.85% despite a 4.54% sell off.

The US market experienced a strong week with the Dow Jones gaining 1.53% and NASDAQ following

with a flat week of 0.17%. With Trump pushing for the US to ease lockdown restrictions, the US markets

reacted positively with expectations that business operations will be able to resume. This was good news

for the financial markets which was presented by solid weekly gains.

On Wednesday, the US was about to experience a significant milestone with SpaceX (run by Elon Musk

who is also the CEO of Tesla) launching its first rocket. Unfortunately, the take off was postponed until

Saturday due to bad weather. This take off was of great importance for the US as they would no longer

need to go through Russia for space travel if this operation is successful. Along with this, Elon Musk

reached his first payout out of his incentive scheme being approximately $700 million - the biggest payout

for a director in history. This was due to him being able to keep Tesla stock above a $100 billion valuation

for 30 days with a 6-month trailing average.


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Tuesday 26/05 - The Hang Seng Index experienced a +1.9% and a gauge volatility dropping by 5.6%,

trading at 23,384.66. Mainland investors are flowing into the Hong Kong index due to low valuations.

The SSE experienced a +1%, closing at 2,846.55. Most likely due to the start-up board that was attributed

to increased technical shares, led by Huawei. On Monday, Huawei launched a new machine vision

product. The medical industry also led the gains across the index as China prepares for a second wave of

infections.

Wednesday 27/05 – The USD/CNY is at its highest since Sep 2019, trading at 7.1565, representing a

0.30% gain of the day. Worsening US-China tensions over Hong Kong have weighed in on the renminbi.

Furthermore, India-China border tensions have heightened causing a bearish pull on the Yuan.

Thursday 28/05 – The Nikkei 225 index saw a 2.32% rise finishing at 21,916.31, a 3-month high since

27/02. Positive sentiments surrounded the Japanese index after the reopening of Tokyo and four other

prefectures. Brokers also attributed the rise to the Cabinet’s latest fiscal stimulus worth more than US$1.1

trillion. Despite Japan’s debt ratio of 196%+, the central bank has been busy churning trillions of yen

through its open-ended QE program.

Friday 29/05 – The Nikkei closed in lower experiencing a -0.18%. The Nikkei is bracing itself for a new

wave of bankruptcies in Japan. Tokyo-based Teikoku Databank revealed that the expected number of

bankruptcies is expected to jump to more than 10,000, far worse than the GFC.

This week the JPY/USD experienced a minimal range and lack of direction finally experiencing a recovery

above 107.40. Lockdown restrictions are easing, and nations are focusing on the path to economic

recovery. Nevertheless, Japan’s current economic weakness and export dependence indicates a slower

recovery compared to countries like the US.

The SSE experienced a +0.22% trading at 2,852.35 points. The medical and cultural media industries

were among the biggest gainers. According to Yuekai Securities, “the construction of new medical

infrastructure is gaining momentum after the pandemic and medical equipment providers are the direct

beneficiaries”.

The USD pivoted lower against the Yuan compared to Wednesday’s figures, trading at 7.1277. The

weakening occurred in response to President Trumps’ Press Conference.

Wednesday 27/05 – the Stoxx Euro 600 rose 0.7% to 351.48 after news that the EC will propose a US$

825 billion recovery fund to help the European economy.


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Thursday 28/07 – the index continued its advance rising 1.6% as healthcare stocks rose. Vaccine maker

GlaxoSmithKline gained 2.1% as it revealed plans to produce 1 billion doses of vaccine efficacy boosters

for COVID-19 shots in 2021.

Friday 29/05 – The EUR/USD breaks above 1.1100 level since the end of March. The rise followed

positive sentiments around the EU's upcoming fiscal stimulus package of 750 billion Euros. The ECB’s

plan to expand its bond-buying scheme next week also boosted the Euro. Improved COVID-19 statistics,

as the number of infections decreased in Italy and Spain also cast a wave of optimism. Continued fiscal

stimulus from the ECB is predicted to send the EUR/USD to new highs, assuming that Sino-American

tensions do not boil over.

The FTSE 100 experienced a -2.5%, trading at 6,061 points. Global markets became anxious before a

briefing by US President Trump, while protests in Hong Kong and Minneapolis continue to unsettle

traders. Asian-focused companies like Prudential fell by 3% and Standard Chartered and HSBC by 2%.

Rolls Royce performed the worst, tumbling down to 11% and pushing down on the index.

The GBP/USD experienced a +0.22% trading at USD 1.2321. The Sterling has not fully taken advantage

of the USD weaker stance. Looming over the GBP is the uncertainty of Brexit as the UK has refused to

extend the transition deadline beyond year-end, raising the risk that the UK will fall back to WTO rules in

2021. More bleak news from the BoE as officials are pushing the possibility of negative interest rates.

Questions and Feedback

Questions

As we mentioned in previous emails - we started UNIT Monash with the vision of educating the student

community in investing and trading to one day strive for financial independence.

We want to create a new concept of peer-to-peer communications about investing and trading. There's a

lot of value in sharing experiences, having opinions and shedding light on new ideas. Feel free to get in

contact with us via Facebook if you have any enquiries about investment, trading or our upcoming events.

Feedback

We consistently strive to improve on how we can best meet your needs and provide relevant and useful

content for you, our valued members. If you want us to cover a topic or want to tell us what you think we

are doing right, please click here to fill out our one-minute feedback form.

We want to thank you in advance for your contributions.


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Regards,

UNIT Monash

SPONSORS AND PARTNERS

Disclaimer

The authors of this publication are not qualified to provide financial or investment advice and as such the

content provided should not be construed in this manner. All information is intended purely for educational

purposes and is provided for the personal interest of UNIT members. The opinions expressed within the

weekly newsletter do not reflect those of UNIT as an organisation, its partners or its sponsors.

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