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News for October 30

The largest Russian search engine, Yandex, had trouble recently due to the rumours that the Russian government is going to increase the state control of the company. Yandex shares plunged more than 4.5% in one-day trading in both Moscow Exchange and NYSE last Wednesday on the news that Russian state bank Sberbank is going to purchase a significant part of the company’s shares. The main concern of the investors is related to the company’s independence which used to be the key competitive advantage as well as the main attractive factor for the team of employees. Russian internet giant with the overall revenue of 1.5 billion dollars used to be independent while the Russian government is interested to control the media space, especially Yandex.News application.

A global liquidity crisis is forecasted by one of the largest institutional investment funds in Great Britain. Aberdeen Standard Investments is acting in contrast to the majority of the fixed-income market players, buying securities with a higher level of liquidity compared to the spot obligations. The owner of the fund, Luke Hickmore, explains such an interest to liquid securities with his concerns about the overall market liquidity in case if investors will start exiting the passive instruments market. He also is interested in such assets as obligatory ETFs and credit-default swaps because of the largest on record trade volume of American swap indices. Traditional bonds are not so easy to sell in case of emergency, and Aberdeen Standard Investments is getting ready for a global liquidity crisis.

Russian billionaires are getting even richer in 2018, at a faster pace than in other regions despite the international sanctions against Russia. Average Russian citizens struggle because of growing inflation while the reachest people managed to add funds to their capital in the fastest way in the world. Ten richest people enlarged their wealth by 10.8% in 2018, according to Bloomberg’s billionaire index. American magnates increased their capital by 7.5% while British billionaires noticed the growth of 3.4% despite the Brexit story. The worst result was noticed in China as 10 richest people lost around 27% of their wealth in 2018, mainly because of the technology sector and real estate sell-off. The Russian growth is related to the price of oil which has been growing throughout the whole year.

Source: The Conversation

Chinese yuan weakened to the lowest rates since January 2017 right after the U.S. Treasury report which did not call China as the currency manipulator. Yuan was trading in a tight range closer to August lows, supporting the risk appetite for emerging markets before the report, as the outcome of the news was widely expected. Peoples Bank of China had lowered the official exchange rate by 0.25% on Thursday and yuan declined for 0.3% to 6.9422 per one dollar. More weakness is seen for the currency, especially in the scope of reaching an important psychological level of 7 yuan per dollar, the lowest rate in a decade. Some traders were expecting that the Chinese government will resist the yuan’s weakness, however, it seems that it’s not on their best interest as the U.S. dollar is strong currently. The next resistance level is placed at 6.964.

JPMorgan Chase had increased the chances of an upcoming recession in the U.S. to 60%. The investment bank published the research based on economic modelling, and analysts are concerned about the upcoming crisis. The timeframe of the research is 2 years, while the probability of the recession in the upcoming year is only 28%, according to JPMorgan. Three-year perspective is even more pessimistic with 80% chances for the crisis to start. The model includes such indicators as consumer and business confidence, earnings growth, durable goods orders demand and the share of construction in the gross domestic product. The New York Federal Reserve has a more optimistic forecast though, which includes only 14.5% chances for the recession in the upcoming year.

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