Read the most important financial stories impacting investors today.

China Central Bank Chief Warns Of Potential For Sudden Collapse In Asset Prices

Published on 20 October 2017

China’s central bank governor Zhou Xiaochuan has issued a warning that “excessive optimism” among investors could lead to a “Minsky Moment” – when asset prices suddenly crash after a period of sustained growth due to high levels of corporate and household debt or currency pressures, according to Reuters.

“If there are too many pro-cyclical factors in the economy, cyclical fluctuations are magnified and there is excessive optimism during the period, accumulating contradictions that could lead to the so-called Minsky Moment,” Zhou commented yesterday on the sidelines of China’s 19th Communist Party Congress.

Zhou added that China “should focus on preventing a dramatic adjustment” by reining in debt levels and maintaining tight control on credit.

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Alphabet Leads US$1 Billion Fundraising Round In Lyft

Published on 20 October 2017

Google-parent company Alphabet is leading a US$1 billion funding round in Lyft, which values the ride-hailing firm at US$11 billion, according to CNN.

Google is also an investor in Uber, Lyft’s chief rival, which was recently valued at US$70 billion.

David Lawee – a partner at CapitalG, which serves as Alphabet’s growth equity investment arm – commented: “Ridesharing is still in its early days and we look forward to seeing Lyft continue its impressive growth.”

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Goldman Sachs: Cryptocurrencies Are Not The “New Gold”

Published on 20 October 2017

Investment bank Goldman Sachs thinks that cryptocurrencies like bitcoin “are not the ‘new gold’ despite their recent popularity,”and is advising investors to maintain precious metals such as gold in their portfolios as they “remain a relevant asset class,” according to CNBC.

In a note to clients, Goldman said: “The use of precious metals is not a historical accident – they are still the best long-term store of value out of the known elements.”

Goldman also warned that cryptocurrencies are vulnerable to hacking, and frequently experience significant price volatility.

“Gold is clearly better at holding its purchasing power, and has much lower daily volatility,” the bank added.

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China Stocks Slump After Data Shows Slowing GDP Growth

Published on 19 October 2017

Chinese stocks traded lower after data released by the Chinese government showed that gross domestic product (GDP) growth in the world’s second largest economy in the third quarter was 6.8%, meeting expectations but lower than the 6.9% seen in the previous quarter, according to MarketWatch.

The Shanghai Composite Index fell 0.34%, while Shenzhen main board tumbled 0.82%, and Hong Kong’s Hang Seng Index plunged 1.92%.

“Traders may position for further weakness into the year-end, suspecting financial curbs will continue to have a negative impact on growth in China,” commented Stephen Innes, head of trading for Asia at Oanda.

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Bitcoin Nosedives 9% As Traders Fear Greater Scrutiny From US Regulators

Published on 19 October 2017

Bitcoin prices tumbled nearly US$500 or around 8.7% to hit a low of US$5,109.70 yesterday amid reports that US regulators are seeking to attain greater oversight over bitcoin trading, according to CNBC.

Other major cryptocurrencies also traded lower, with Ethereum plunging over 7%.

Bitcoin reached a record high of US$5,856 last Friday, and seen a six-fold increase since the beginning of 2017.

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Alipay, WeChat, Android Rank As Top Brands Among Chinese Consumers

Published on 19 October 2017

A survey by marketing consultancy Prophet of over 13,500 people across 39 cities in mainland China revealed that Alibaba, WeChat, and Android are the three most important brands that Chinese consumers cannot live without, according to the South China Morning Post.

Five of the top 10 brands (and nearly half of the top 50) in the ranking are tech-related companies, indicating the extent to which technology has infiltrated the daily lives of Chinese consumers.

“Chinese consumers today live, work and play in a connected, digital world, so the brands that deliver useful, easily accessible and enjoyable experiences are going to be the most relevant to their lives,” remarked Tom Doctoroff, a senior partner at Prophet.

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Tech Giants Amazon, Apple, Google, Facebook Will All Be Gone In 50 Years, Analyst Says

Published on 19 October 2017

Scott Galloway – a professor at New York University’s Stern School of Business and entrepreneur – predicts that Amazon, Apple, Google, and Facebook will all probably have disappeared in 50 years’ time due to new innovation, increased competition in global markets, and regulatory pressure, according to Investopedia.

“Of the Dow 100 from 100 years ago, only 11 have survived. With the business life cycle getting faster and faster, a child born today will outlive all of these firms. Do I see them getting more and more powerful? Yes. Do I see all of them dying within our lifetimes? Yes. The fatality rate among our species, and firms, is 100%,” Galloway commented.

Of the four US tech giants, Galloway thinks that Amazon has the best chance at survival.

“if you are trying to pick the one that might outlive the others, the good money right now is on Amazon,” he said.

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Dow Closes Above 23,000 Mark For First Time, Powered By IBM Gains

Published on 19 October 2017

The Dow Jones Industrial Average closed above the 23,000 mark for the first time yesterday, boosted by a 8.9% rise in IBM stocks after the tech company reported third-quarter revenue that beat analysts’ expectations, according to Reuters.

The S&P 500 and Nasdaq Composite also notched record closing highs.

“Retail investors continue to pour into the marketplace, and with each headline about a new record, and especially round numbers like that, people tend to feel like they’re missing out and you kind of suck more people into the market,” commented Ian Winer, head of equities at Wedbush Securities.

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US President Donald Trump’s Fortune Falls By US$600 Million

Published on 19 October 2017

A ranking released this week by Forbes revealed that US President Donald Trump’s net worth dropped by US$600 million last year to US$3.1 billion, causing him to slip 92 spots to #248 on a list of the 400 richest Americans in 2017, according to CNBC.

Forbes commented that the dip in Trump’s net worth was primarily caused by a downturn in the New York real estate market.

Trump is now tied with Snap founder Evan Spiegel, the youngest person on the list, who also has a personal fortune of US$3.1 billion.

With a net worth of US$89 billion, Microsoft co-founder Bill Gates topped the list for the 24th consecutive year.

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World’s Most Expensive House Listed For US$410 Million

Published on 19 October 2017

Villa Les Cèdres – an 18,000-square-feet, 14-bedroom mansion situated on a 35-acre plot on the Saint-Jean-Cap-Ferrat coast of France – has been put on the market for US$410 million, and if it fetches that price it would be the most expensive residential sale in history, according to CNN.

The lavishly decorated villa was built in 1830, and was later purchased by King Leopold in 1904.

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Trump’s Treasury Secretary Warns That Stock Market Will Tumble If Tax Overhaul Fails

Published on 19 October 2017

Steven Mnuchin, the US Treasury Secretary, warned members of US Congress that if they fail to pass US President Donald Trump’s massive tax-relief bill, the stock market will tank, according to Politico.

“There is no question that the rally in the stock market has baked into it reasonably high expectations of us getting tax cuts and tax reform done. To the extent we get the tax deal done, the stock market will go up higher. But there’s no question in my mind that if we don’t get it done you’re going to see a reversal of a significant amount of these gains,” Mnuchin said.

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