Market newbies discover penny stocks, and 1 trillion shares get traded


Examples of the enthusiasm on over-the-counter venues abound. On Wednesday, almost 4 billion shares of Healthier Choices Management Corp., a $US21 million ($27 million) company that trades for $US0.0002 per share, changed hands. Electrical appliance company Service Team, valued at $US2.7 million with a stock price of $US0.0003, saw 2 billion shares move. For comparison, fewer than 90 million shares of Apple moved, while volume on Tesla didn’t surpass 35 million.

Last year, mum and dad dabbled in so-called reopening stocks like airlines and cruises, bought shares of bankrupt companies and poured into the option market. This is just their latest venture: stocks with prices so low and financial documentation so sparse that they don’t trade on classic stock exchanges.

We’re definitely in a market where my cleaning lady is asking me ‘Do I like solar companies?’ Because she bought a solar company that’s a NASDAQ stock through Robinhood. And it’s tripled.

OTC Markets president Cromwell Coulson

While it takes far less money to move such stocks, fascination with them is the latest iteration of day-trader exuberance, a trend many Wall Street veterans worry about.

“We’re seeing massive — record, even — activity in the most speculative vehicles that are allowed in the US,” Sundial Capital Research President Jason Goepfert wrote to clients on Wednesday. “Markets have proven time and again that when confidence is this high, we’re going to get spanked. It may take awhile, but it happens.”

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Last month, low priced stocks that don’t trade on classic exchanges — often (confusingly) called “over-the-counter” securities — saw more than 1 trillion shares change hands, Finra data show. That’s the first time in a decade such activity happened off exchange, and for comparison, amounts to almost 50 times the volume traded among securities in the Nasdaq Composite Index, according to Sundial Capital Research.

Even among Nasdaq and NYSE-listed shares, the most actively traded stocks on Wednesday were again the tiniest companies. Take Castor Maritime, a dry bulk shipping firm currently valued at 37 US cents a share. It saw 499 million shares traded. Or Zomedica, where volume hit 488 million shares after almost reaching the billion mark a day earlier and surpassing it on Monday.

Cromwell Coulson, the president of OTC Markets, says there’s a simple explanation for all the buying.

“It’s clearly a bull market,” he said. “I would be very careful. We’re definitely in a market where my cleaning lady is asking me ‘Do I like solar companies?’ Because she bought a solar company that’s a NASDAQ stock through Robinhood. And it’s tripled.”

Few firms illustrate the manic advance of penny-stocks better than Signal Advance, a small medical firm in Texas that soared after Elon Musk urged in a tweet for his followers to “use Signal,” a messaging app.

After an 885 per cent rally in the middle of Monday’s trading session, Signal Advance briefly became a nearly billion-dollar firm, just hours after its market-cap was roughly $US7 million. Shares closed above $US38 on Monday after trading below $US1 for most of the past six years.

Scott Knapp, chief market strategist of CUNA Mutual Group, says he sees plenty of hints that markets are exuberant, pointing to a hot IPO market, the emergence of SPACs, and Bitcoin’s rampage. Now, add to that the runup in shares of small public companies.

“On the list of the exuberance story is what’s happening in the micro-capitalisation tiers,” Knapp said. “As it stands right now, markets are on performance enhancing drugs, in the form of expectations for more stimulus.”

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The housing market was going to drop 30pc during the pandemic but instead many areas are booming


It seemed like the worst possible year to break into the housing market.

When the health impacts of COVID-19 were still being counted, it was already clear the pandemic was going to corner the world into recession.

But despite the prediction the housing market could drop by 30 per cent, experts say many parts of Australia have pulled through stronger than ever.

Caitlin Ketley, 24 and Ben Munton, 27, are among the young people who in 2020 made their first-home-owner dreams come true.

“We thought this year is probably the worst year to try and secure a place,” Ms Ketley said.

It wasn’t. As soon as the couple realised the conditions were favourable — interest rates were “extraordinarily” low, and the government was pushing out stimulus packages — they took on extra shifts, cut back on takeaway coffee and saved as hard as they could.

“I was pretty much working seven days straight and just continuing. You’ve got to get all the shifts that you can to try and save and make sure you can pay back the mortgage,” Ms Ketley, who works in retail and wildlife care, said.

“I guess COVID also helped in that sense as well because no-one could go anywhere.”

They decided to “put their best foot forward” and offered $40,000 over the asking price.(ABC News: Katri Uibu)

It seemed that everyone else had noticed the advantageous conditions also, leading the couple to miss out on a desired property more than once.

“It just seemed that every house we liked just popped off the market pretty much straight away, as soon as the open homes had been,” Ms Ketley said.

Then, when they saw a house in Chigwell in Hobart’s northern suburbs, they decided to “put their best foot forward” and offered $40,000 over the asking price.

“We knew that if we didn’t offer a substantial amount over, there’d be no chance of us securing a property,” Mr Munton said.

They couldn’t offer even $1 more than their offered price of $400,000 and still get 50 per cent discount on stamp duty.

It was the “big deposit, big savings” and being “super realistic” about what they could afford that landed them the $400,000 home — three days after first viewing it.

Some markets stronger than ever before

Property data expert Louis Christopher said at the time the 30 per cent market drop was cautioned, it was unclear how the Government would respond to the looming pandemic.

“If they were not responding correctly — providing the right stimulus over the right timeframe — we could have had a major correction in the housing market,” the SQM Research managing director said.

Instead, the Government pushed out JobKeeper and JobSeeker support and launched stimulus packages directed towards first home buyers and the construction industry.

Buyers decided to look outside of the CBD locations and take their dollars to regional Australia, which in effect experienced a market growth stronger than ever before, while inner-city locations “weakened”.

A man and a woman carry pieces of insulation outside a home in suburbia.
The couple missed out on a couple of houses.(ABC News: Katri Uibu)

“It hasn’t happened before. Not [in] all regional Australia all at once, that’s never happened before, so this is a first,” Mr Christopher said.

Regional Tasmania benefitted most from the exodus of Australians escaping high-density locations, with CoreLogic reporting dwelling values in the area have increased by 11.9 per cent.

Tasmania’s Acting Finance Minister Mark Shelton said more people had applied for first home owner stimulus packages during the pandemic than the year before.

‘Twelve months ago, when coronavirus hit, nowhere was sure where it was going to go,” he said.

“[The stimulus packages] have incentivised people enough that they’ve made decisions to build new buildings and keep people employed.”

Applications for first home owner grants increased from 688 to 828 and for home owner duty concession, from 1,385 to 1,491.

There are 1,864 applications for the Federal Government’s HomeBuilder grant registered to date.

A word of caution

No doubt “record low” interest rates have encouraged home buying, too.

Mr Christopher said we’d have to look as far back as the 1950s and then potentially find that what we have now are “record low” rates.

He said the average buyer with “good credit” could get a variable lending rate of about 2.5 per cent, which is “extraordinarily low”.

The rates are not predicted to rise anytime soon, but that’s not necessarily a good thing.

“Part of the reason is because there’s so much debt in the system, publicly and privately,” he said.

A drawing of a high rise building in Sydney CBD.
Buyers decided to look outside of the CBD locations in Sydney, Melbourne and Brisbane.(Supplied)

“That’s not a good place for the world economy to be.

He said 2021 is going to be “a tenant’s market” for the CBD locations and “a landlord’s market” for regional Australia — but beyond that, things would likely return to the pre-pandemic era.

“I think many of those people will stay in the regions for an extended period of time. They’re going to give regional Australia a go,” Mr Christopher said.

“But there’s definitely a part of the population that’s going to come back — particularly once COVID is truly behind us.”

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Airbus keeps top spot in coronavirus-blighted jet market



FILE PHOTO: The nose of an Airbus A380 is seen outside the factory of Stelia Aerospace, a subsidiary of Airbus, in Meaulte, France, July 2, 2020. REUTERS/Pascal Rossignol/File Photo

January 8, 2021

By Tim Hepher and Pawel Goraj

PARIS (Reuters) – Europe’s Airbus posted stronger-than-expected deliveries of 566 jets in 2020, remaining the world’s largest planemaker as a year of pandemic-induced upheaval for air travel coincided with a grounding crisis at U.S. rival Boeing.

Deliveries fell by 34% from a record posted a year earlier, when travel demand was riding high on the increasing mobility of consumers in fast-growing markets across Asia.

Now, the aerospace industry is wrestling with the reluctance of most airlines to take delivery of jets as they struggle to save cash, and a drop in air traffic that Airbus says could take until 2023 or 2025 to regain the pre-pandemic levels of 2019.

Still, Airbus said it had delivered 566 aircraft in 2020, exceeding estimates earlier in the year when the coronavirus crisis led to a lockdown of major travel markets.

“We can be cautiously optimistic for 2021…but challenges and uncertainties remain high,” Chief Executive Guillaume Faury told reporters.

The announcement confirmed a Reuters report on Tuesday that Airbus had delivered more than 560 jets in 2020.

Airbus declined to give 2021 deliver forecasts ahead of full-year earnings due on Feb. 18.

Airbus sold a net total of 268 aircraft last year after adjusting for cancellations, down from 768 in 2019.

Hampered by the grounding of its best-selling 737 MAX, Boeing delivered 118 jets between January and November and had a negative total of 454 net orders before accounting adjustments, giving Airbus an unassailable lead.

Deliveries of the MAX, grounded in March 2019 following two fatal crashes, resumed last month.

Airbus deliveries rose sharply in the second half of the year compared with the first months of the crisis as Airbus made a push for delivery agreements with many airlines, in some cases allowing for temporary storage, according to industry sources.

But Airbus said virtually all new planes had entered service, even though many were not being flown as intensively as they would have been before coronavirus upended growth plans.

CANCELLATIONS

Faury reaffirmed plans to raise output by 18% in the second half of the year while noting volatility over forecasts, with rising infections offset by accelerating vaccine rollouts.

Cancellations included 10 A350 wide-body jets worth $3.2 billion at list prices from AirAsia X. Airbus said it had taken the decision to cancel the deal, but questions remain over 108 other orders from the troubled Malaysian budget carrier.

Planemakers have used the crisis to remove or reclassify some orders – left over from a decade-old speculative order boom – that were seen as unlikely to result in actual deliveries.

Airbus has told a Malaysian court it stands to lose more than $5 billion worth of orders as it challenges AirAsia X’s debt-restructuring plans.

In total Airbus lost orders for 26 wide-body jets, reflecting a slump in intercontinental travel that is expected to be the slowest segment to recover.

They were, however, dwarfed by cancellations to be reported by Boeing next week after airlines and leasing companies cancelled hundreds of orders for the MAX during the grounding.

With the industry’s main showcase, the Paris Airshow, cancelled in 2021, Airbus cautioned it did not expect a return towards big-ticket jet orders while travel remained depressed.

“It will be a while before we are back on an even keel,” Chief Commercial Officer Christian Scherer said.

(Reporting by Tim Hepher, Pawel Goraj; Editing by Louise Heavens, David Evans and Alex Richardson)



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Central banks must arm up for next market upheaval, BoE’s Hauser says



FILE PHOTO: A general view shows the Bank of England in London, Britain, December 17, 2020. REUTERS/Hannah McKay

January 8, 2021

By William Schomberg

LONDON (Reuters) – Financial markets are likely to be hit more often by the kind of upheaval unleashed by the COVID-19 pandemic, and central banks need new tools to deal with powerful investment firms at the heart of the turmoil, a Bank of England official said.

Non-bank companies, which include pension managers, money market funds and hedge funds, now account for about half of the world’s financial assets.

“Last year’s COVID ‘dash for cash’ was a wake-up call as to the scale and urgency of this work,” Andrew Hauser, the Bank of England’s (BoE) executive director for markets, said in a speech hosted by Reuters on Thursday.

Non-banks have increasingly helped savers and businesses as banks were reined in on risk after the 2007-09 financial crisis.

But they failed to withstand the coronavirus shock in March and reforms are needed to prevent future liquidity problems threatening the economy, Hauser said.

Central banks should consider a formal role as “market makers of last resort” – trading securities at times of financial panic – in return for tougher regulation of financial businesses other than banks, he said.

This would mirror the role of “lender of last resort” which the BoE provides to the heavily regulated banking sector.

Last March’s surge in demand for cash, as economies around the world went into lockdown, was exacerbated by chaos in normally stable debt markets.

Businesses and investors scrambled to get money out of funds, which in turn struggled to raise the cash.

That helped cause a spike in government and corporate bond yields that threatened to deepen the hit to the global economy and forced central banks into huge emergency action, chiefly by ramping up their bond-buying programmes.

Non-banks also failed to function as intermediaries for government bond markets, which have soared in size since the 2007-09 financial crisis, Hauser said.

VULNERABILITIES

Since March, the central banks of the Group of 10 (G10) nations have added $8 trillion to their balance sheets, mostly by buying government bonds.

That has helped to bring down borrowing costs and allowed huge government spending to slow the economic slide, but adds urgency to the case for reform of non-banks, Hauser said.

“We should certainly be wary of drawing overly direct conclusions from the COVID pandemic, given how truly unique the circumstances have been,” he said.

“But many of the vulnerabilities in financial markets exposed last spring have been staring us in the face for some time – and will only grow in importance in the years ahead, as households and firms come to rely ever more closely on such markets to care for their savings, and fund investment.”

The Financial Stability Board, grouping regulators from around the world, is considering ways to make non-banks safer.

But new central bank tools to deal with problems will be needed too, Hauser said.

Offering permanent or ‘standing’ facilities would be a way to reduce the impact of market turmoil on well-run businesses, while allowing a broader framework of rules and a way to reverse asset purchases that were meant to be temporary, Hauser said.

“The public authorities cannot afford to ignore such dysfunction if it reaches a scale that threatens financial stability,” he said.

“But equally we cannot rely on central bank medicine of the scale and duration seen in 2020 every time we see an inflammation.”

Central banks should aim to keep the spread between the price to buy an asset and the price received when selling it within reasonable limits, but not target the price of assets themselves, Hauser said.

But deciding which assets the BoE should buy, and what it should charge to businesses that needed to use the facility – sometimes through no fault of their own – would be tricky.

Government bonds would be an obvious starting point and coordination would be needed between central banks, Hauser said.

(Additional reporting by David Milliken and Andy Bruce; Editing by Alexander Smith)



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Dow Jones Futures Rise After Stock Market Falls From Highs, As Bitcoin Recovers


Dow Jones futures, along with S&P 500 futures and Nasdaq 100 futures, rallied early Tuesday as the price of Bitcoin looked to recover from Monday’s plunge. Apple stock is approaching a new buy point, while Nio surged to new highs. Tesla dived Monday amid a potential climax top, but rallied about 2% early Tuesday. Zoom Video tumbled more than 5% early Tuesday on a share offering.




X



The stock market rally fell from record highs Monday amid moderate declines in the major stock indexes. The Dow Jones Industrial Average eased 0.3%, or 89 points, while the S&P 500 slid 0.7%. The tech-heavy Nasdaq composite declined 1.25%.

Among the Dow Jones leaders, Apple (AAPL) sold off 2.3%, while Microsoft (MSFT) lost 1%. Meanwhile, Amazon.com (AMZN), Facebook (FB) and Twitter (TWTR) all fell sharply. Amazon stock declined 2.15%. Facebook dropped 4% and Twitter tumbled 6.4%.

However, chip giants Advanced Micro Devices (AMD) and Nvidia (NVDA) advanced 2.8% and 2.6%, respectively. AMD hit a new high, while Nvidia is approaching a new buy point, according to IBD MarketSmith chart analysis.

Tesla (TSLA) dived nearly 8%, as it flashes several signs of a potential climax top. Shares looked to rebound Tuesday, rising about 2% in premarket trade. Chinese rival Nio (NIO) surged 6.4% to hit record highs after unveiling its new sedan at its Annual Nio Day. Shares added about 1.5% premarket.

Early Tuesday, Zoom Video (ZM) said it seeking to raise $1.5 billion through a stock sale. Zoom stock tumbled more than 5% in premarket trade. Shares ended Monday more than 40% off their 52-week high.

Stocks in or near buy zones in the current stock market rally are Chipotle Mexican Grill (CMG), Lululemon (LULU) and Tractor Supply (TSCO).

Apple, Chipotle, Microsoft and Tesla are IBD Leaderboard stocks. Lululemon and Tractor Supply were featured in this week’s Stocks Near A Buy Zone.

Dow Jones Futures Today

Early Tuesday, Dow Jones futures and S&P 500 futures traded up 0.3% vs. fair value. Nasdaq 100 futures moved up 0.4%. Remember that trading in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Among exchange traded funds, Innovator IBD 50 (FFTY) rallied 1% Monday. The Nasdaq 100-linked Invesco QQQ Trust ETF (QQQ) traded down 1.45%. Meanwhile, the SPDR S&P 500 ETF (SPY) descended 0.7%.

U.S. Stock Market Today Overview

IndexSymbolPriceGain/Loss% Change
Dow Jones(0DJIA)31008.69-89.28-0.29
S&P 500(0S&P5)3799.61-25.07-0.66
Nasdaq(0NDQC )13036.43-165.55-1.25
Russell 2000 (IWM)207.55-0.17-0.08
IBD 50 (FFTY)43.35+0.42+0.98
Last Update: 4:26 PM ET 1/11/2021

Coronavirus Updates

According to the Worldometer data tracker, the cumulative number of confirmed coronavirus cases in the U.S. topped 22.9 million on Monday. Total virus-related deaths rose past 383,000.

The cumulative total of worldwide Covid-19 cases confirmed since the start of the outbreak topped 90.9 million Monday, with more than 1.9 million virus-related deaths.

Coronavirus Stock Market Rally

Looking back at the current uptrend, November was a key month for the stock market. IBD’s The Big Picture flagged the new uptrend following the market’s bullish follow-through day on Nov. 4. Meanwhile, 2021 sees stocks just off their record highs.

Friday’s Big Picture commented, “The Nasdaq led Friday’s action with a 1.1% advance. A 2.4% gain for the week hammered home the point that big and megacap techs are not ready yet to roll over.”

Investors should continue to use the stock market’s strength to buy breakouts. Be patient and wait for powerful breakouts instead of chasing extended stocks. If the new breakouts work, then add more exposure. But if breakouts start to fail, then you can back away.

In particular, focus on stocks with strong relative strength. Find them by using the relative strength line. The RS line measures a stock’s price performance vs. the S&P 500. If the stock is outperforming the broader market, then the RS line angles upward. If a stock is performing worse than the broad market, then the line will point lower.


Stock Market ETF Strategy And How To Invest


Bitcoin Price

The price of Bitcoin plunged as much as 23% Monday to hit a low of $30,305. Bitcoin traded around $35,500 early Tuesday, recovering more than 16% from Monday’s lows, according to Coindesk. The Grayscale Bitcoin Trust (GBTC) tumbled 15.85% and is more than 20% off its 52-week high.

Bitcoin set an all-time high at $41,962 on Friday. Year to date, Bitcoin is up about 20%.

Dow Jones Stocks To Watch: Boeing Slides

Boeing was one of the worst performers on the Dow 30 Monday. Shares fell 1.5% after a Boeing 737-500 jet flown by Indonesian carrier Sriwijaya Air crashed in the sea shortly after takeoff from Jakarta with 62 people on board.

Boeing stock is testing its 50-day moving average line and is about 40% off its 52-week high.

Stocks In Or Near Buy Zones: Chipotle, Lululemon, Tractor Supply

IBD Leaderboard member Chipotle Mexican Grill regained its 1,366.76 double-bottom buy point last week as it bounced off its 50-day line. Shares edged 0.1% higher Monday. The 5% buy zone goes up to 1,435.10.

According to IBD Stock Checkup, Chipotle stock shows an 81 out of a perfect 99 IBD Composite Rating. The Composite Rating — an easy way to identify top growth stocks — is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths.

Lululemon moved down 1% in a volatile session after the company improved its adjusted earnings and revenue guidance for the fourth quarter. Lululemon expects Q4 earnings and sales to come in “at the high end of its prior range of expectations.”

A real flaw is the stock’s weak RS line. Its RS line is far from its old highs, indicating sharp underperformance. The relative strength line measures a stock’s price performance vs. the broad market.

Tractor Supply is within striking distance of a 150.79 buy point in a cup with handle. Shares briefly topped the entry before closing below the buy point amid Monday’s slight gain.

Chip Giants AMD, Nvidia Lead

IBD 50 stocks AMD and Nvidia advanced sharply Monday, shrugging off the stock market’s weakness.

AMD is well extended from an 88.82 buy point in a double bottom amid Monday’s 2.8% rise.

IBD Leaderboard stock Nvidia rallied 2.6% after Chinese electric-car maker Nio selected Nvidia automated driving technology for its new Nio ET7.

According to Leaderboard commentary, “Nvidia may finally be forming the right side of its base, after weeks of flat action. The stock is still forming a flat base.” The new buy point is 587.76.


IBD Live: A New Tool For Daily Stock Market Analysis


Nio Stock

Chinese Tesla rival Nio surged as much as 13% before slashing gains to 6.4% Monday after the company unveiled its new Nio ET7.

Shares tumbled nearly 5% late Monday before reversing higher early Tuesday after the company announced it will sell $1.3 billion of convertible senior notes. The Chinese carmaker said it plans to use net proceeds from the notes offering mainly for general corporate purposes.

The Nio ET7 will launch in Q1 2022. The ET7 will come with advanced driver-assist capabilities, including Lidar functionality and an Nvidia-powered supercomputer. Nio claims it’ll have far-greater computing power and camera resolution than Tesla Full Self Driving.

Shares followed through on Friday’s breakout move above a 57.30 buy point in a short cup base. Shares are already extended past the buy zone.

Tesla Stock In Climax Top?

IBD Leaderboard stock Tesla dived from record highs Monday, falling nearly 8%. Shares snapped an 11-day win streak. Tesla looked to rally early Tuesday, rallying about 2% in premarket trade.

Check out Friday’s IBD Stock Of The Day for a detailed analysis of Tesla’s potential climax top, signaling that investors might want to take some profits.

On Friday, Tesla stock hit a record high at 884.49. Shares climbed as much as 88% from a 466 buy point in a cup with handle.

Dow Jones Leaders: Apple, Microsoft

Among the top Dow Jones stocks, Apple fell 2.3% Monday. Shares are forming a base with a new buy point at 138.89, according to IBD MarketSmith chart analysis.

In recent weeks, Apple shares have moved above aggressive entries at 125.49 and 122.09.

Software giant Microsoft moved down 1% Monday, as it fights to hold above its 50-day line. Shares continue to trace a new base with a 228.22 buy point.

Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones futures.

YOU MAY ALSO LIKE:

Top Growth Stocks To Buy And Watch

Learn How To Time The Market With IBD’s ETF Market Strategy

See Stocks On The List Of Market Leaders With IBD Leaderboard

Looking For The Next Big Stock Market Winners? Start With These 3 Steps

How To Research Growth Stocks: Why This IBD Tool Simplifies The Search For Top Stocks



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‘Great opportunities’ for first homebuyers amid high market confidence



There are “great opportunities” for first home buyers as confidence in the Australian housing market remains high, according to Insights Manager at Finder Graham Cooke.

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Swedish auto firm Scania eyes BRT buses market


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Swedish auto firm Scania eyes BRT buses market


A Scania East Africa high capacity bus. PHOTO | COURTESY

Swedish bus and heavy trucks manufacturer Scania will venture into mass production of high capacity buses once the demand for the units picks up in readiness for the rollout of the bus rapid transport (BRT) system in Nairobi.

The automaker last week unveiled a 91-capacity prototype bus developed in conformity to the government’s specifications following its tender seeking provision of BRT buses to be introduced on five selected city routes.

“We are ready to bring in completely knocked down units to be assembled at Associated Vehicle Assemblers in Mombasa for both chassis and body if there is a demand for the unit,” said Scania East Africa pre-sales manager Peter Gwaro.

The government plans to launch six BRT corridors in Nairobi in a move aimed at reducing traffic congestion in the capital. Priority corridors are JKIA to Likoni, James Gichuru-Rironi, and Bomas to Ruiru roads.

The local car assembly industry got a major boost last year after plans to import BRT buses from South Africa were reversed following a push by the assemblers who said they had the capacity to manufacture the vehicles.

Mr Gwaro expressed optimism on the uptake of its Scania diesel-driven BRT buses.

“We are targeting private and public investors who require such buses that comes with 37 seats including a wheelchair space and adequate room for 54 standing passengers,” he said.

Isuzu East Africa is also eyeing to supply BRT buses.

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Nearly $170 billion wiped off cryptocurrency market


A visual representation of the cryptocurrency Bitcoin on November 20, 2018 in London, England.

Jordan Mansfield | Getty Images News | Getty Images

GUANGZHOU, China — Bitcoin and other digital coins tanked on Monday wiping off some $170 billion from the entire cryptocurrency market.

The market capitalization or value of the cryptocurrency market was $959.53 billion at 12:10 p.m. Singapore time, down from $1.1 trillion a day earlier, according to Coinmarketcap.

Bitcoin, the largest cryptocurrency, fell over 11% from a day earlier to $35,828.06, at around 12:15 p.m. Singapore time. Ether, the second-largest, was down around 15% to $1,126.72.

The sell-off in cryptocurrencies comes after a huge rally and perhaps signals some profit-taking from investors. Bitcoin is still up over 340% in the last 12-months and last week hit an all-time high just below $42,000.

Bitcoin’s resurgence has been attributed to a number of factors including more buying from large institutional investors.

And it has also been likened to “digital gold,” a potential safe-haven asset and a hedge against inflation. In a recent research note, JPMorgan said bitcoin could hit $146,000 in the long term as it competes with gold as an “alternative” currency. The investment bank’s strategists noted, however, that bitcoin would have to become substantially less volatile to reach this price. Bitcoin is known for wild price swings.

But some bitcoin critics — such as David Rosenberg, economist and strategist at Rosenberg Research — have called bitcoin a bubble.

Long-term bullishness around bitcoin remains however. Last week, Social Capital’s Chamath Palihapitiya said bitcoin could go above $100,000.

“It’s probably going to $100,000, then $150,000, then $200,000,” Palihapitiya told CNBC’s “Halftime Report.” “In what period? I don’t know. [Maybe] five or 10 years, but it’s going there.”

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South Korea’s IPO market poised for record year on booming retail demand



January 8, 2021

By Heekyong Yang and Scott Murdoch

SEOUL/HONG KONG (Reuters) – South Korea is set for the busiest year ever for new share sales as companies ranging from a digital bank, game developer to an electric car battery maker rush to take advantage of robust retail demand, bankers and analysts said.

Its IPO market could raise up to 20 trillion won ($18.40 billion), a record and about four times above 2020 levels, led by firms providing products that are more in demand from people stuck indoors due to the pandemic, analysts said.

Also, a move by the country’s financial regulator to increase the allocation of IPO shares to retail customers this year will drive up investment, they added.

The projection comes against a recent rally in the main KOSPI index to above 3,000 for the first time, with investors looking towards a broad recovery in exports beyond South Korea’s tech titans.

This is “shaping up to look like it could be a record year”, said David Chung, head of Korea investment banking at Goldman Sachs. “The majority of big mandates and IPO themes are around the technology sector.”

That includes companies that were offline but now, amid the health crisis, have built up a significant online presence, Chung added. “That is where the growth is.”

Deals in the pipeline include a potential 4.6 trillion won float from KakaoBank, which has benefited from an inflow of customers from South Korea’s dominant chat app operator Kakao Corp. Kakao has a 32% stake in KakaoBank.

KakaoBank has picked advisers but not decided when it will list, a spokesman said.

An estimated 9-trillion won share sale by Tesla supplier LG Chem’s electric car battery unit is also in the pipeline, according to an analyst.

The IPO size or timing has not been decided yet, an LG Energy Solution official said.

South Korean companies raised about 4.7 trillion won via initial public offerings in 2020, Korea Exchange data shows, surpassing the past two years, but behind an all-time high of about 10 trillion won reached in 2010.

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EV battery maker SK Innovation’s chemical material unit SK IE Technology (SKIET) is also expected to make its market debut this year, bankers and analysts said.

SKIET said it plans to complete the IPO process within 2021.

Consumer demand for EVs has been relatively resilient, aided by tighter environment regulations and the launch of new models.

In South Korea, a “New Deal” economic initiative that pivots on digital innovation and eco-friendly growth is burnishing the appeal of EV-related stocks.

Gaming company Krafton and SK Bioscience are also looking to raise about 5 trillion won and 600 billion won, respectively, this year, Seoul-based SK Securities said.

In October, Krafton picked advisers for its IPO with plans to go public in 2021. A company spokeswoman said on Friday there were no further details to share at the moment.

SK Bioscience was not immediately available for comment.

Individual investors, who piled into the South Korean market last year, are trading at a pace not seen in years.

In 2020, the KOSPI clocked its biggest rise since 2009 as shares in companies like Samsung Electronics, the world’s biggest maker of memory chips, surged.

“The market right now is clearly attractive to retail investors and it will likely attract more of them as IPO shares allocation for retail investors has gone up to as much as 30% from 20%,” said Lee So-joong, an analyst with SK Securities.

($1 = 1,086.7300 won)

(Reporting by Heekyong Yang in Seoul, Scott Murdoch in Hong Kong; Additional reporting by Jihoon Lee, Joyce Lee; Editing by Sumeet Chatterjee and Himani Sarkar)

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Irish whiskey makers eye Asia as COVID hits key US market


TOKYO/SHANGHAI — Irish whiskey makers, reliant until now on coronavirus-hit Europe and the U.S., have sniffed opportunity in Asia.

Walsh Whiskey entered the Asian market early 2020 to expand its core brands, Writers’ Tears and The Irishman. The company formed partnerships with distributors in Japan, South Korea, Taiwan, Singapore and Sri Lanka.

The Irish whiskey maker had earlier started to sell its products in Malaysia, but moved into large-scale exports to Asia as regional governments seemed successful in containing the spread of coronavirus.

“Asia does appear to have better control of COVID than other regions globally. That relative stability helps new products like ours,” Bernard Walsh, managing director of Walsh, told Nikkei Asia, adding, “This is a long-term investment, and we appreciate that Asia is composed of a diverse set of economies operating at different speeds.”

The company is focusing on making a strong impression — especially in Japan, the biggest market in the region. He called Japan the “jewel in the crown” of Asia.

Walsh joins other Irish whiskey producers vying for the lucrative Asian market, such as Hyde Irish Whiskey.

Hyde too considers Japan to be an important market. Hyde CEO Conor Hyde said, “Japan represents an exceptionally large whiskey market, and even a small shift of overall whiskey sales to Irish could offer substantial volume growth.”

Ireland is one of the world’s five greatest whiskey-producing countries. Scottish whiskey, one of the world’s most recognized, generally has a smoky taste. Irish whiskey is known for its smoothness and mellowness.

Asian consumers, however, are largely unacquainted with Irish whiskey, with the drink making up just 0.04% of total whiskey consumption by volume in the region in 2019, according to Euromonitor.

Japanese and Scottish distillers are considered the big players, with about 5.9% share each in Asia. Irish spirits are categorized as premium spirits. For example, Hyde No. 3 The Aras Cask is priced in Japan at around 5,500 yen ($53.12) per 0.7 liter.

Even as Japanese whiskey makers such as Suntory look overseas, worried about the aging population of their home market, Irish makers see opportunity in Japan.

Joe Moore from Bord Bia — the Irish Food Board — told Nikkei that also Japan’s population is slowly decreasing, and research suggests that young people are drinking less than previous generations, there is a focus on “less but better.” He added that “Irish producers are focused on the premium categories and in general aren’t targeting the lower-valued categories on offer in traditional bars.”

Yasuhiro Ueda from Nihon Shurui Hanbai, a Tokyo-based liquor wholesaler, agreed with Moore, saying the “consumer is looking for premiums and something unique.”

The wholesaler began introducing Irish whiskey early 2020, choosing Hyde as its first brand. Ueda said, “Hyde is different from other Irish whiskey in its taste and focuses on its barrel,” which matches consumer demand.

“It is too expensive to enjoy every day, but Hyde was delicious,” said a self-employed man in his 30s, named Chiba, who bought his first Irish whiskey last spring. “After work sometimes, I want to drink something premium even if the price is high.” He said he had not drunk beer since shifting to whiskey some time ago.

He is the sort of young Asian customer that Hyde hopes to attract. A Hyde representative said the company is targeting male and female whiskey fans roughly between the ages of 25 and 45.

CEO Hyde, who is also the founder of the company, said, “We project that Asia’s increasing population, income growth levels and relatively early recovery from COVID [compared to the U.S. and Europe] will help to rapidly increase Hyde Irish whiskey sales in this region over the next five years.”

Hyde is aiming for 20% annual sales growth in Japan over that period.


Hyde Irish Whiskey Conor Hyde said Asia’s “increasing population, income growth levels and relatively early recovery from COVID” will help its company sales. (Photo courtesy of the company) 

In China, a new market for Hyde, the company is aiming to sell 5,000 cases in 2021.

China has a small and evolving group of wine drinkers who are turning to whiskey, John Isacs, a food and beverage critic with over two decades of experience in China, told Nikkei. “In particular, the single malt, a common whiskey, has become fashionable in the past two years in China’s first-tier cities among wine-loving, cigar-smoking and well-traveled businesspeople.”

He added, “Irish whiskey is not the mainstream, as it is a different animal, as its distillation progress is slightly different. It doesn’t have the prestige of Scottish or Japanese whisky.”

As in many other businesses, cracking Asia’s biggest market is big challenge.

To win market share, Isacs said, whiskey sellers needed to reach out to young cocktail-drinkers because “they are the future.”

Rather counterintuitively, the higher price for imported whiskeys could actually be a draw for affluent Chinese consumers who want to be associated with premium brands. “People in the 35 to 45 age range make a statement with [such products],” he said.

In China, the market for spirits is dominated by white wine and baijiu, distilled from sorghum, and affluent drinkers of Western spirits traditionally opt for brandy, including cognac.

But that did not stop Bord Bia from pushing Irish whiskey in the Chinese market.

“Young drinkers are now looking for something new, and a lot of them are turning to whiskey and new brand spirits,” said Dale Breheny, Bord Bia’s marketing adviser.

Both Irish whiskey and Irish cream received a boost recently when they were included in an agreement between the EU and China that should protect them from counterfeit products from 2021. Under the agreement, Irish whiskey and Irish cream liqueur have to be produced in Ireland.

Irish whiskey accounted for about one-fifth of total alcohol exports to China in 2019, and it has grown by over five times in the past five years, according to Bord Bia.

Even so, it is considered new in China among traditional drinkers who prefer baijiu, which is often served at social gatherings and weddings. To penetrate further into the market, Bord Bia will focus on markets in first-tier cities, including Shanghai and Shenzhen.

“This is a growing category,” said Breheny. “We don’t need to [convert] drinkers from other categories. I don’t think the baijiu drinkers are going to change what they drink. There is space for everyone.”

For Irish whiskey makers, the U.S. market has been the biggest export destination for a long time. According to the “Irish Spirits Market Report 2019,” based on a market study by beverage research company IWSR, the largest export market for Irish whiskey — including Irish cream liqueur and the country’s traditional distilled beverage poitin — was the U.S., at 42% of the total. Outside its home market, the biggest markets after the U.S. are global travel retail, Russia and the U.K. 

However, the coronavirus pandemic paralyzed the economies of all these important markets, and makers are trying to diversify to the East because, “as the situation regarding coronavirus is relatively calm in Asia, the level of [whiskey] consumption is normalizing, especially in China and Japan,” Moore told Nikkei. “Consumption hasn’t reached that of previous years, but the market condition is recovering.”

On top of that, Irish companies “have been working hard to diversify their markets due to Brexit,” Moore noted, referring to Britain’s divorce from the EU.

Another Irish distiller, Origin Spirits Ireland, is also trying to expand distribution in Asia, after it started to sell in Singapore and Japan. Managing Director Patrick Shelley told Nikkei that it aimed to be among the top 10 brands in Asian whiskey markets by mid-2022.

Shelley said, “Asia has the potential to become the largest market for Irish whiskey in the next 10 years. Irish whiskey is still relatively unknown in Asia, but its style and taste appear to appeal to the Asian palate.”



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