The 7 Potentially Disastrous Investments of 2020 ⋆ Disruption Banking

It is always a challenge to write a fitting epilogue to a Year, and even more so in the case of the disastrous year that 2020 has been. And, as opposed to some of the other large financial newswires, we won’t tell you all about how the editorial team learnt to bake bread and took their dogs for too many walks. Or how we rediscovered the amazing English countryside. No, we want to focus on some of the investment ups and downs that 2020 was so generous with, and perhaps mention Tesla too.

The graph in our headline relates to the specific story of Pfizer and how other investments compare to how Pfizer’s stock has performed in 2020. We hope it caught your attention, and now you are here…

The Requiem to 2020 needs to start earlier than 2020. In fact, we highlighted to our readers the detailed timeline of the dreaded plague in a story published in April. In the Article we noted that the 17th November 2019 was the day of the first recorded case of COVID-19. And this is really where the story of 2020 must begin.

Most of us were not aware of any potential pandemic, at the time, and were probably glued to our newsfeeds watching the unveiling of the new TESLA ‘Cybertruck’:

By Christmas last year the continuing protests in Hong Kong dominated TV screens. Whilst discussions about whether 5G was safe, let alone whether we should buy it from Huawei, were also ongoing. One of our first stories of 2020 covered the use cases of 5G Technology. And the 5G topic stayed with us for quite a while in 2020. It does make one wonder, what would have we been able to achieve as a human race this year if we’d fully adopted 5G in 2019? Ask the people of South Korea perhaps…

Next up was the World Economic Forum in Davos, where we covered a story about Donald Trump talking about how: “the States is in the midst of a great economic boom the likes of which the world has never seen before”. China was not such a contentious issue at the time, in fact constructive trade talks were in full flow.

PUBLIC HEALTH EMERGENCY

A few days later, on the 30thof January the World Health Organisation announced a Public Health Emergency. People started to be aware that something was ‘up’, but nobody was prepared for what was about to unfold.

One of the ‘buy’ investments of 2020 hotly touted by the research team at Motley Fool was easyJet. I am sure everyone can still remember the collapse of Thomas Cook in 2019. Well, easyJet was to benefit hugely from the vacuum left behind, and a lot of investors in the UK might have been silently wishing for a healthy return sometime later in 2020. Little did they know.

February seemed to pass by without being too ‘disastrous’. Some pictures started emerging about what was happening in China, but nobody was cancelling their luxury cruise plans just yet. In fact, even in early March, most of easyJet’s flights were looking busy and the biggest thing on investor’s minds appeared to still be Brexit and not some bat soup from China.

It was only during the last few days of February when we wrote a story about Goldman Sachs revising their forecast for Gold to $1,800 an ounce, that it started to become clear that we were headed for a Black Swan event.

GLOBAL PANDEMIC

On the 11thof March the World Health Organisation stepped up their rhetoric by announcing a global pandemic. Capital markets were already in turmoil with the 9 thof March being labelled ‘Black Monday’, it became the first time we started to bander around the phrase: ‘turbulent times’. Central banks globally tensed up with some even comparing the 2020 ‘Black Monday’ to that of October the 19 th, 1987!

On the 24 thMarch the hearts of Fintech fans across Europe were dented by the news that the #Money2020 Europe edition was being rescheduled from its traditional dates in June, to the 22 nd- 24 thof September.

By the 30 thof March flights globally were being grounded, with easyJet being highlighted as one of the examples of disruption being caused by the pandemic.

At this point companies all over the world started to digitise overnight. Where once we may have, in passing, heard of Zoom, we now became avid attendees of the Zoom meeting. And just like that, the ‘Zoom economy’ commenced.

Zoom wasn’t the only new concept that people started to familiarise themselves with either. Universal Basic Income became a term that started to be popular outside of Switzerland and Finland for the first time. In fact, Britney Spears herself came out on the side of wealth redistribution with #ComradeBritney trending on Twitter. And, with governments around the world starting to react to the pandemic with various economic packages, it was the US stimulus that had one of the biggest impacts:

CARES ACT

Payments following on from the CARES Act, started to be paid to US citizens on the 13thof April. Coincidentally Tesla’s shares soar almost 14% on the same day, although there is no link between payments and Tesla in specific. Tesla shot up another 9% the day after too, with April ending really positively for Tesla. Even Elon Musk got caught off guard by the way the share price was trending:

Tesla stock price is too high imo

- Elon Musk (@elonmusk) May 1, 2020

Of course, some challenger banks were already making investing in Tesla, Apple and others an option on their Apps. How many people took up that option in 2020 is hard to say, but the technology was there since 2019.

Talks about Negative Interest Rates were popular at this point too. We shared a story about the effect of this initiative with our readers, back in May. In the story it emerged that Sweden had already implemented the concept back in 2009, however, it looked like their response to the pandemic was about as astute as the outcome of the #NIR experiment.

In the meantime a small firm out of Silicon Valley had 3 million new accounts opened so far in 2020 by May. And Robinhood has continued to grow since then, with commentators across the world marvelling at the ‘democratisation’ of trading, as millions of new retail investors flocked to trading websites like Robinhood and TradingView in 2020.

Tesla was reported to be one of the most sought after equities by new investors on these platforms.

Regulators have not been asleep while this new trend has appeared, and although it is great to see so many seeking financial freedom, new risks have arisen too.

On the 3 rdof June HSBC and Standard Chartered backed the China Security Law. Millions across the world had been waiting for the final decision of the banking giants when it came to tensions in Hong Kong. Globally opinions about the banks’ decisions were mixed, but for the first time it looked like the pro-democracy protesters were losing their battle.

With June 4 thbeing the anniversary of the Tiananmen Square protests, Zoom was another company to hit the headlines in Hong Kong. Accusations of politically motivated behaviour in closing accounts affiliated to pro-democracy protesters in Hong Kong were thrown at the company, which is not blocked in China. Some, in the United States, went so far as to denounce Zoom for bowing to the Chinese government, according to the Guardian.

At the time we chose to highlight a few stories about China here at #DisruptionBanking, covering features about the Shenzhen Stock Exchange and the One Belt One Road Initiative. Both of these subjects have helped our readers to better understand the new economic landscape that China is creating. Talk of China becoming the leading global economy, taking over the title from the United States also became louder in the summer.

All of this had little effect on the share price of Zoom with the 13 thof July being their highest valuation so far in 2020, before a small correction across the markets. The ‘Zooming’ share price took a rest, at least for a few months. Its best moments were still to come.

VACCINE UPDATE

A week later on the 20thof July, Britain signed a deal with Pfizer to secure 30 million doses of the experimental BioNTech/Pfizer vaccine. For the first time markets started to feel some hope, that, and the dropping number of new cases across Europe, added to some much needed optimism both for the markets and wider society.

Across the world people started to realise how much cleaner water was, with Dolphins appearing in coastal waters they hadn’t visited for decades. Smog levels had dropped dramatically due to the various lockdowns across the world, and for the first time the case for ESG seemed to be getting the press it needed.

We also started covering the ESG topic in far more detail. With a rising tide of analytics companies updating their products to better monitor ESG exposure, capital markets really have moved in the right direction.

GOLD HITS RECORD HIGH

With Gold being such a safe haven, the fact that it hit $2000 / ounce on the 4thof August had a mixed reaction from markets. Some said it was the sign of falling government bond yields, dollar weakness, extreme stimulus packages and high levels of geopolitical uncertainty.

HSBC’s chief precious metals analyst, James Steel, expects gold to continue to strengthen into 2021.

On the same day, the 4 thof August, #Money2020 released an important update about their live events in Amsterdam and Las Vegas, moving them both online. The events industry and networking forums took a further blow, even though the event was eventually hosted virtually.

In the background a small company called Wirecard was all the German regulator needed to think about while all this turbulence was going on:

A full investigation has been demanded by Peter Altmaier, Germany’s economy minister. “It’s really important to me that such a case never happens again — for the sake of confidence in the German banking system,” #disruptionbanking #paytech https://t.co/9p2J0g1BOL

- #DisruptionBanking (@DisruptionBank) July 7, 2020

But it was mostly old news by August, with bankers, retail investors and millions of other people across the world worrying about getting a bit of sun before we all had to face the prospect of #BackToWork or more #StayAtHome.

The Regulators looked on, starting to think of who to blame for some of the ‘unnecessary’ parts of the turbulence that had come with ‘Black Monday’. Guidance proposals started to be presented to market participants covering things like algorithmic trading and artificial intelligence. Shadow Banks were also addressed. Within a few weeks, though, it was apparent that compliance professionals would have to continue monitoring traders working from home for the foreseeable future.

PAYPAL ALLOWS CRYPTO

For much of 2020 Bitcoin had quietly got on with its business, Coinbase was functioning normally,and generally there was not much to report. But on the 21 stof October PayPal changed that. Even American Express are getting involved now!

We had covered a story about ‘The Decentralized Finance ( DeFi) or Open Finance movement’ which should have been a hint of things to come. From a meagre $600 million worth of crypto being deposited onto the DeFi platform in January to a whopping $10 billion by the 11 thof September, it was only a matter of time before big brother, or Bitcoin, caught up.

Voting took place on the 3rdof November, but due to some challenges surrounding postal voting we had to wait till the 7 thto find out if Biden had succeeded in challenging Trump’s Make America Great Again campaign. What is certain is, that Biden will have the pandemic on his hands, while keeping one eye on ESG going into 2021.

Also, on the 3 rdof November, across in China, Jack Ma was summoned by regulators to discuss the imminent listing of Ant Group on the Hong Kong and Shanghai Stock Exchanges. The mother of all IPOs at $35 billion, with huge market interest, it would have been a nice success story for so many new retail investors to share in at the end of 2020. It was not to be though. And the after effects of the cancellation of the IPO are still being felt today.

Good news was not far away:

One must wonder how significant the 9thof November might be in the next few years. Will we hold a moment’s silence next year in some symbolic tribute to the travails of the pandemic? In any event, Pfizer finally came up with the goods. Pfizer? Surely a good investment?

Well, let’s see.

It pays dividends, it focuses on the future, it has the vaccine, and it has big cash flows to work with. The research team at Motley Fool are suggesting you add the stock to your portfolio, although they have been known to give bigger endorsements. Looking at how the share price has performed in 2020, there might be some reason to doubt the optimism.

More than 500,000 people have already had the first dose of the Vaccine in the UK, according to Boris Johnson. The teams at Pfizer and BioNTech have done miracles to rollout the Vaccine so quickly, let’s all hope it works.

With events like #Money2020 and #Sibos all moving online, it was comforting to see that Fintech was thriving amidst the continued pandemic. And for a week in December (7 th- 11 th) there was a break from the doom and gloom. Bill Gates wowed us with his praise of Digital India, whilst AKON sold us his dream. Thousands of global banking and tech leaders gave us there opinions about 2021 and beyond, but one Bank stood out.

HSBC

HSBC is used to being a global leader in Banking, with one foot firmly planted in Asia and the other in the UK. In the Banks filed accounts from end 2019, Hong Kong made up 35.1% of its’ global revenue, with the UK in second place with just 24.5%.

Noel Quinn, Group Chief Executive of HSBC, has had one hell of a year, digitising his bank whilst trying to negotiate his way through the US — China Trade tensions. At times having to contend with the title of China’s ‘Huawei’, referring to the way that the US are treating ‘Huawei’ with regards to 5G.

Here he is caught speaking a few weeks before the Singapore FinTech Festival about data, analytics and the future:

HSBC’s shares are on the up, so he might finally have something to smile about. But, the road to recovery for Quinn and his team will stretch long into 2021, going by how their share price stands today compared to a year ago.

And, the one thing that so many of us probably hoped for.

In 2017.

Bitcoin finally went over $20,000 this December, and looks like it will keep going for some time yet with latest figures putting it above $24,000 for a record-breaking end to the year.

Obviously the cancellation of Christmas at the end of the year is a slight dampener to all those Crypto enthusiasts celebrating. Thousands of bitcoin holders have finally coming out of the closet now that the price of a bitcoin is finally higher than it was back almost exactly 3 years to the day.

SUMMARY OF POTENTIALLY DISASTROUS INVESTMENTS

We had a look at the trend on 7 of the potential investments we have discussed in this Article.

If you had put $1000 into these 7 investments back on the 2 ndof January 2020, then today (23 rdof December) you would be looking at a return of :

• TESLA: $7529
• ZOOM: $5761
• BITCOIN: $3298
• GOLD: $1227
• PFIZER: $989
• HSBC: $660
• easyJet: $558

As of today Tesla, Gold and Bitcoin are all ‘Buy’ recommended by users of TradingView. The above numbers are collated using data freely available on platforms such as TradingView.

But it might not just be companies like Zoom that define how we remember 2020. The analysts at Motley Fool had a real job with easyJet all year. Once easyJet’s fleet was off the ground again there was a moment of: “are easyJet shares ready for take off?”, often followed by a “forget easyJet’s share price, I’d buy these stocks instead”. And like easyJet, society has also stumbled from one lockdown to another in the COVID reality of 2020, never knowing if we can take that flight to Spain, or, not.

And so with that in mind, perhaps you should consider spending some money on the future on Boxing Day, but remember, there are more turbulent times ahead…

#5G #Huawei #TESLA #Cybertruck #WorldEconomicForum #easyJet #WorldHealthOrganisation #NegativeInterestRate #NationalSecurityLaw #StandWithHongKong # ESG #Money2020 #SingFintechFest #Bitcoin #Zoom #Pfizer #Gold #HSBC #ComradeBritney

Author: Andy Samu

Originally published at https://disruptionbanking.com on December 23, 2020.