Flow Traders Investment Competition | Week 5 | Markets in the red

Another week in the competition, another week in the red. Stocks ended lower this week and investors fled to bonds for safety. This is reflected in this week’s ranking of the Flow Traders Investment Competition. But let’s first get an indication of how markets performed globally: U.S. S&P 500 ended -4.6%, Eurostoxx 200 Large -3.4%, AEX -2.96% and SHCOMP -1.3%.

In the U.S., investors are unnerved due to the changes in the U.S. treasury yield curve. The 3-year rates have exceeded the 5-year rates, which raises fears of an inverted yield curve, some investors see this as a signaling of a downturn ahead. On another note, during the G20 summit Donald J. Trump and Xi Jinping agreed to ceasefire any trade tariffs for 90 days and negotiate an agreement, but investors realized that a substantive agreement was not reached. Adding fuel to the fire, the CFO of Huawei was taken into custody in Canada due to Huawei breaking trade tariff rules, which resulted in China not being happy.   

In Europe this week, politics played a big role. Major protests in France by the Gilets Jaunes contributed to a decline in the CAC 40 index. While in Britain, Theresa May’s main goal is to convince parliament to pass Brexit. The European Court gave non-binding advice that Britain can exit Brexit unilaterally.  This Tuesday the vote will happen.

In Emerging Markets, the Reserve Bank of India (RBI) has under pressure of India’s government lowered the capital reserve framework due to the possibility of a liquidity crunch. Foreign investments in China slowed down which resulted in equity and bonds falling. But in positive news, Vietnam’s economy is growing strong, its index gained 3.46% this week.

In the Flow Traders Investment Competition, not a single investment group made a profit and 23 out of 40 groups are currently in a loss. Holding cash seems like a good strategy, but for how long? Merx took the largest loss of 4.22% followed by Hermanszoon Capital -3.17%, but still in last place is Hercules with a M2 of -12.38%. The biggest losses are made on the DAX and Food commodities, while gains are made in the aerospace industry. Tune in next week!  

Written by Adnaan Willson, Education & Career Commissioner