Our Content Team members share articles to one another all the time. Here is a selection of what they’d recommend you to read.
What’s behind China’s stockmarket roller-coaster ride?
Irrational exuberance, a phrase used by the then-Federal Reserve Board chairman, Alan Greenspan, when referring to a market that is over-valued, could well be a line that accurately describes the current state of affairs in the Chinese stock market, not only by its prolonged rally out of touch with fundamentals, but also because is now openly seen as ‘a casino without rules’. Pretty much the same feeling I have when driving along the roads in any sub-developed Asian country, be it Bali, where I live, a good illustration. Bikes not respecting traffic lights, people not wearing helmets, kids riding bikes… Extrapolate the Bali road chaos but in Chinese equity markets, that’s the picture I get in my mind after reading the article and witnessing day in and day out irrational wild swings.
As Bloomberg reports, there are now more retail traders in China than communist party members (more than 90m retail traders!). Bear in mind that these traders come from not so sophisticated educational backgrounds, new-found wealthy individuals that cash out property investments as the housing markets slows down, also add into the mix the Chinese culture, more prone to seek the highs of gambling adrenaline, hence relying on margin financing to inflate the bubble further and further, while at the same time, well founded speculations continue to emerge that the whole situation might be sitting well with the Chinese govt, aiming to recapitalize China’s cash-strapped companies and inject money into the real economy. All sounds too twisted … an article worth a read
In the office these days, with all the events in Greece, there are many conversations about “what if” and “how would” scenarios. I personally wonder how you introduce a new tangible currency in such a short period of time – should Greece exit the Euro in a few days. How long can it take to produce new bills and coins and make them available? Can the “old” currency (in this case Euro) still be used by the people to buy goods and services until the new currency is introduced? I could not find an answer to my second question, but did find one to the other, in an article by The Telegraph. And it does not seem to be that easy (no wonder though). The article also mentions alternatives as parallel currencies, IOU’s and digital currency. That leads me to another conversation we had the other day about the many local or social currencies created around the world – as the Bristol Pound. But that’s a topic for another post I guess!
Trading Leverage – A Real Look at how Traders May Use it Effectively
The “profiling” of clients is a difficult task, but I think the industry needs to invest more in customer analysis. Compared to the banking or insurance sectors, the retail Forex hasn’t made great efforts in this regard. There is a growing costumer sophistication around the world, including in Asia, and so more sophistication is also required by Forex broker-dealers. We may see funds which in the past went to marketing going more into mapping costumer behavior, their trading styles, risk levels, capitalization, motivations, etc.
This article is an excellent work in this direction, and I wish our company strengthens its ties with the sell side in order to provide more of this analysis.