› News for January 8.

News for January 8.

The past year was terrible for the richest citizens of the globe. Bloomberg reported a survey of the total capital of 500 wealthy people and the total cut was massive - $511 billion. The first half of 2018 was optimistic for international billionaires as the market conditions were favourable for the capital growth. Total wealth volume was approaching a record-high volume in history: 500 people obtained almost $5.6 trillion. However, the recent market plunge and a decrease in global corporations shares cost caused a cut of the estimated amount, down to 4.7 trillion dollars. American billionaires were traditionally represented by a majority of richest people - 173 of 500 with the total capital of $1.9 trillion. The decline of that indicator was at the level of 5.9%, according to Bloomberg’s estimate. Amazon Corporation CEO Jeff Bezos remained on the first place of the rating list with the largest capital in the world - $115 billion. However, his recent losses were dramatic as September’s calculations were showing an incredible result of $168 billion. Mark Zuckerberg, the owner of the social network Facebook, was also among the losers, suffering a plunge of $23 billion starting from January. His record was seen at the level of $49.7 billion. Asian countries were represented by 123 billionaires with the overall capital cut of $111 billion. The largest loss was seen for Wanda Group Owner Wang Jianjin - $11.1 billion. Among others, German businessman Georg Schoeller struggled from heavy loss of $17 billion; Spanish entrepreneur Amancio Ortega, Zara Network owner ($59.2 billion) and Mexican investor Carlos Slim ($53.9 billion). Russian billionaires did not face such a significant loss with the total decline of 2% and the overall result of $255 billion.

Brexit saga keeps weighing on British investors. Theresa May and her government managed to negotiate a deal with the European Union, however, that deal has to be implemented by the British Parliament. Initially, the Parliament vote was scheduled for December 11. But British Prime Minister suddenly decided to postpone the debate for January 11, as she’s got several warnings from her advisors about a huge resistance in the Parliament. The opposition political parties were not the only force to withstand May’s deal, as she also faced many opponents in her own Conservative Party. The Parliament debate is scheduled to start on January 9, right after the Christmas and New Year Holidays. It will take several days for discussions and consultations. The key vote and decision should be published in the third week of January. British Foreign Trade Minister Liam Fox called Members of Parliament to support Theresa May’s deal. He underlined that this is the only option to support British voters in their historical decision to leave the European Union. Otherwise, the United Kingdon might enter into uncharted territory with lots of uncertainty for the economic impact and the country’s unity. Hard non-deal Brexit scares investors, adding further pressure on economic growth results in the medium-term perspective. European Union officials refused to negotiate alternative deal conditions, calling the May’s deal as the only option possible. Moreover, EU is adding pressure on British government in order to cancel the Brexit at all, with the UK staying in the European Union. If the Parliament vote failed to support May’s government, a second referendum might take place with the intention to cancel the Brexit at all. Such a scenario might be positive for the British Pound though.

Meantime, US stock indices were vulnerable to enormous volatility in the first week of 2019. After unprecedented growth in the last week of 2018, which had shown a growth of almost 5% in Dow Jones Industrial Average benchmark (a thousand points approximately), equities plunged for around 2% right on the next trading session. The industrial index slide was noticed amid investors’ concerns related to the trade war tensions between the United States and China. Although leaders of two largest world’s economies - Donald Trump and Xi Jinping - managed to agree a ceasefire during a one-on-one meeting in Argentina in early December, the real actions had demonstrated completely different intentions from both sides. Investors were disappointed by mutual aggression seen behind the scenes and the 90-days period of further negotiations appeared under a threat. More import tariffs are seen from the US side, as well as the Chinese government’s steps to open its border for American exports is at a huge doubt currently. According to Nicolas Kolas from Datatrek Research, “the market is getting bored from all of that news coming from Washington. I suggest that a stabilization process should start for all of the US major indices shortly as it’s getting harder to keep the same policy, the main factor of which remains uncertainty of the securities price formation”. Market players were reportedly worried about the oil price decline and critical assessment of the Federal Reserve’s tightening measures for the monetary policy in the United States. Such unjustified interest rates hikes, according to many analysts in the private sector, might lead to further pressure on the economic growth in the largest world’s economy. Moreover, the political pressure for Fed Chair Powell has been also noticed to escalate as President Donald Trump was seriously discussing legal options to fire Powell with his advisors. Although the economic growth is still expected to gain strength in the US, it might show unstable performance.

One of the largest US investment banks, JPMorgan Chase & Co. agreed to pay a fine of $135 million in order to settle claims from US Securities and Exchange Commission. JPMorgan shares dropped 1.5% right after the announcement. The company has been penalized for incorrect ADR work, according to the Wall Street Journal. BNY Mellon ($54 million), Citibank ($38 million) and Deutsche Bank ($75 million) has been fined by SEC in the last six months as well. The total number of large banks appeared under the investigation was exceeding eight names. SEC stated that the ADR violations are still investigated by the authority. The regulator also stated that those banks were anticipatorily providing ADRs for related international emitents, which were not delivered to clients’ accounts yet. That violation caused banks’ surge of the number of shares traded at foreign markets. ADR market operations which were mentioned by the regulation autorities, were noticed in the period of 2011 - 2015. JP Morgan Chase did not admit nor refused the SEC statement, however, the company agreed to pay out the obtained profit and aditional fines. “We’re glad we solved the issue which was related to the sector practice which we stopped providing several years ago”, - JPMorgan representative Brian Marchioni said. ADR is a freely negotiable security for an international emitent at US stock market, deposited in American bank. The largest Wall Street depositories are BNY Mellon, Citigroup, Deutsche Bank and JP Morgan. All of them were already fined by SEC.

News for January 8.

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