Forex Trading Investment: February 2021

Monday, February 22, 2021

Facebook blocked news in Australia. How will conflict end?

Facebook issued a challenge to the Australian government on Wednesday after the latter announced about considering new law, which would make social media platforms pay for news content. While the government has been contemplating this law for some time now, it seems the chances to approve it increased. The tech giant counteracted to gain the upper hand even though the Australian lawmakers are still discussing various possibilities.

While Facebook aimed to show Australia what it would lose without its platform, it seems the company has overplayed its hand. Banning all Australian news content from its platform has taken the budding conflict to a whole new level. There’s the possibility that other countries will follow Australia’s lead purely on principle to prove that social media giants can’t control or influence them.

Facebook’s founder’s bold move to impose a news blackout in one country could easily make politicians worldwide rethink how they regulate such companies.

In its quest to prove Australians wrong, the company blocked not only media organizations but government health websites, as well. As a result, the country’s access to up-to-the-minute information about coronavirus and other health emergencies was suddenly not available on Facebook.

After that move, the company faced a wave of outrage, not just from Australian politicians and newspapers but around the world.

United States’ Democratic Congressman David Cicilline declared that Facebook was not compatible with democracy. He added that threatening to bring an entire country to its knees was the social media giant’s ultimate admission of monopoly power.

Furthermore, Julian Knight MP, who chairs the Commons media select committee in the U.K., announced that Facebook was behaving like a bully.

How will other countries counter Facebook’s actions?

While other countries may not go as far as Australia, which demanded tech firms pay up for the privilege of sharing a news link, they may find other ways to take the company at the task.

Many governments were already concerned about how their newspapers have seen advertising revenues fade away in the online era. They may feel that it’s time to show they can also be tougher on the tech giants.

However, not everyone agrees that Australia has got the right approach. Sir Tim Berners-Lee has been concerned about the company’s failure to fight the spread of disinformation.

He thinks that if the idea of forcing tech giants to pay for certain links spread worldwide, it could make the internet as we know it today unworkable.

Reference : https://www.financebrokerage.com

TransferWise Rebrands to Wise as Services Go Beyond Remittance

TransferWise, a fast-growing cross-border payments platform, has rebranded to Wise as the company is expanding its services beyond remittance.

“Our customers now need us for more than money transfers,” Kristo Käärmann, the Co-founder and CEO of the London-headquartered company noted.

Founded in 2010, Transferwise gained popularity by offering mid-market foreign exchange rates to retail customers in addition to a small fee. The company is directly challenging the dominance of the banks and other established remittance platforms that charge hefty margins on the exchange rates.

Over the years, the remittance company aggressively expanded its services by partnering with global payments giants like Visa and Mastercard. For its Asian expansion last year, TransferWise inked a deal with AliPay, which is the largest payments startup in China.

Thursday, February 11, 2021

FXCM Adds Seven More Stock Tracking Baskets

FXCM, a multi-regulated forex and CFDs trading platform, has expanded its offerings by adding seven new stock baskets, which will track companies in some of the emerging and recovering sectors.

The brokerage explained that shares of multiple companies from a sector are put into a basket, offering a single tradeable instrument.

The official announcement detailed that the new sector-based stock baskets will have stocks of airlines, casinos, travel & hospitality, US automotive, US banks, US e-commerce and the newly emerged ‘work from home’, which includes stocks of companies like Zoom, Slack and Twilio.

Commenting on the new additions, FXCM CEO, Brendan Callan said: “We are always looking to create new opportunities for our customers to capitalise on, and this is continued with these new baskets reflecting some of the industries that have seen the biggest market movement during the pandemic.”

A Popular Instrument among Traders

FXCM first introduced such baskets of shares in May 2020. The latest expansion in the offering came with the popularity of those share baskets.

The brokerage currently offers six such share baskets, tracking the popular sectors like FAANG, esports and gaming, biotechnology, cannabis, China technology and China e-commerce.

“Their addition to our offering will provide our customers with the ability to speculate on the fluctuation of companies that have dominated the headlines throughout 2020 in a more cost-effective way while minimizing their risk by spreading exposure across multiple stocks in just a single click,” Callan added.

Owned by American investment company, Jefferies Financial Group, FXCM is regulated in the United Kingdom, Australia, and South Africa. Furthermore, it opened up a new base in Cyprus to continue its European operations post-Brexit.

Finance Magnates last month reported on a cyberattack on the broker as ‘an unauthorized person’ had broken into its database and copied information relating to the company’s conversations with clients. However, that did not affect customer funds and login credentials.

Reference : https://www.financemagnates.com/

PayPal Wants to Be a CBDC Distributor

PayPal could be to central bank digital currencies (CBDCs) what private banks are to physical dollars.

The company’s CEO, Dan Schulman, laid out a vision during its investor day on Thursday for PayPal’s digital wallets being the means by which central banks distributed CBDCs to consumers across income levels.

“You think about how many [digital wallets] we’re going to have in the next two, three or five years, and we’re a perfect complement to central banks and governments to distribute those digitized forms of currency,” Schulman said.

Schulman also revealed that PayPal is looking into smart contracts and tokenizations of other non-crypto assets.

“This is a once in a multi-decade opportunity where the fundamental rails of the system are going to be redefined and we have a chance to help shape that,” Schulman said.

The company also released new numbers around the transaction activity of its customers who use its crypto products.

PayPal customers that use its crypto services have a 12% increase in weekly transactions on the platform. This is in part because more than 40% of the U.S. PayPal customers who use crypto return to complete more than two additional transactions, the company said.

Reference : https://www.coindesk.com/

What is a buyback, and why do companies use it?

In the different specialized financial media, it is common to read that this or that company will make a share buyback. Why does a company buy its shares on the open market? Large companies often use this strategy for different purposes. We will know how this strategy operates and the criticisms that exist to this methodology.

Why do companies resort to share buybacks?

When a company resorts to share buybacks, it does so with one goal: to invest in itself. By making a buyback, a company achieves a reduction in outstanding shares.

What happens when a share buyback is made? As the number of shares on the market is reduced, those that remain represent a larger proportion of the company. The result is that earnings per share will grow.

On the other hand, the buyback of shares allows you to give a course to the accumulated cash that does not generate profits. In this sense, the movement to acquire its shares causes a company a double benefit.

Some companies use this strategy to reward their employees. They carry out the buyback and distribute them among managers and plant personnel of the company. The shares are delivered directly or through options.

When a company decides to buy back shares, it generally uses retained earnings. By doing so, a company causes the same economic effect as paying dividends to shareholders with those profits

How does the buyback process work?

The buyback of shares has become a procedure, increasingly common in the stock markets and among large companies. In 2018, Amazon was authorized by its board of directors to have a trillion dollars available for the buyback of shares.

In 2012, Apple accumulated 120 billion dollars in cash that were finally used to buy back shares.

Warren Buffett, the most followed man in the financial markets, uses a portion of his earnings to buy back shares in Berkshire Hathaway. A mechanism that is put into effect when the share price falls to a certain level.

Companies have two ways to buy back shares:

Present to the shareholders a purchase offer for part or all of the outstanding shares. In these cases, companies often offer a premium above the market price. Let’s say this premium is the cost the company pays to get investors to divest their assets.

A company can go directly to the open market to purchase its shares. In some cases, they have the program with a specific schedule.

To finance the buyback of shares, companies can use different ways:

Dispose of the accumulated cash

Issue debt securities

Make regular purchases using cash flow from operations

Extended buyback

The companies carry out the purchase of shares through a plan previously defined by their board of directors. When an increase in share buybacks alters this plan, we speak of extended buybacks.

There is an indicator that allows to establish the impact of the buyback of shares and compare it with other companies. This ratio is calculated by dividing the number of dollars used in the previous year for the buyback by the market capitalization at the beginning of the buyback period.

Observations on the repurchase of shares

Although share buyback is a common and widespread mechanism, there are criticisms of this action.

Acquiring the shares of the company itself can indicate that there are no possibilities for growth in the medium term. This can negatively influence investor sentiment.

The share buyback can be seen as a mechanism to raise the share price artificially. By doing so, companies achieve higher market value. However, the reasons may be far from the fundamentals that show a thriving company.

Reference : https://www.financebrokerage.com/

Wednesday, February 10, 2021

Bitcoin Volatility Is an Issue for Large Companies, Says JPMorgan

Bitcoin volatility is one of the biggest issues that is preventing large companies to add BTC into their balance sheets, according to a research note published by JPMorgan strategists led by Nikolaos Panigirtzoglou. Tesla, the world’s largest electric-car maker revealed in its latest filing that the company has invested nearly $1.5 billion in Bitcoin.

The research note mentioned that mainstream corporate treasurers are unlikely to follow Tesla’s example due to the volatile nature of the cryptocurrency. The report highlighted the growing Bitcoin inflows after the recent announcement by Tesla.

“The main issue with the idea that mainstream corporate treasurers will follow the example of Tesla is the volatility of Bitcoin. The addition of BTC would cause a big increase in the volatility of the overall portfolio of large companies. BTC allocation could mean the portfolio’s volatility rises to 8% due to Bitcoin’s 80% annualized volatility,” the research note states.

In addition to the $1.5 billion investment, Tesla mentioned that it is planning to consider Bitcoin as a payment method for its products. The price of the world’s largest cryptocurrency jumped more than 20% following the announcement by Tesla.

Bitcoin’s volatility has increased significantly since the start of 2020 due to a rapid jump in adoption and involvement of institutional investors. According to the recent weekly crypto inflows report by CoinShares, the trading volume of BTC has jumped substantially since the start of 2021. Finance Magnates earlier reported about the supply crisis BTC is going through these days. Furthermore, anonymous BTC transactions are on the rise as BTC whales are moving funds from digital exchanges to crypto wallets in an effort to create a supply shortage. Bloqport, the crypto analytics and research platform mentioned today that the Bitcoin withdrawals from crypto exchanges reached the highest level in 3 years. All these factors are playing an important role in Bitcoin’s volatility.

Australia in dispute with Google

Microsoft is ready to intervene with its Bing search engine if Google delivers on its promise to stop service to Australia, the country’s prime minister revealed on Monday.

Australia’s Prime Minister Scott Morrison said he has spoken with Microsoft CEO Satya Nadella. He is confident that Bing could meet the needs of Australians.

Google pledged to cut service to Australia in a public hearing last month on a proposed law to make tech companies pay for news content produced by the country’s media companies.

Morrison argued that it is vital for Australia to set rules that are suitable for its people. It is essential for democracy in Australia to have a news environment that is sustainable and commercially supported, he added.

Google has not commented on this story. Still, Microsoft stated it recognizes the importance of a vibrant media sector and public interest journalism in a democracy. The company recognizes the challenges that the media sector has struggled with for many years by changing business models and consumer preferences.

Concerning the current controversy over a possible code of conduct governing Google and Facebook, Microsoft stated it is not directly involved.

How severe is Google’s warning to cut service to Australia?

Greg Sterling, vice president of Uberall, said that Google has to be serious. If Australia doesn’t give in and Google hesitates, other countries won’t take Google’s tough bargain seriously.

Ultimately, Google is unlikely to act. Besides, because Australia is such a small market with little revenue at stake, they could work on their threat to set an example, Karsten Weide, program vice president at IDC, told TechNewsWorld. Also, It would also make them look weak if they didn’t do it after issuing the threat.

On the other hand, it would make them look like a bully at a time when there is a significant amount of tech attacks taking place.

According to Jack E. Gold, founder and principal analyst at J. Gold Associates, both sides will lose if this issue goes on too long.

Companies worldwide are looking at this, and they see Google making money from them, and they don’t get anything.

But Google offers a service. It takes people to websites they wouldn’t otherwise access. The question is who will back off first, Gold continued. If Google doesn’t back down, they will lose revenue from Australia. In the global scheme of things, that’s pretty small.

Losing Australia is not going to put Google out of business, he said.

The New York Times reported that Google Australia raised approximately US $3.3 billion from Australian advertisers in 2019 and paid around $77 million in taxes, with a reported profit of roughly $637 million.

Information about ecn forex brokers you should know

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