Investors love playing the old hits. They bought US technology stocks and cryptocurrencies on repeat during the stock market bull run of 2021, and can't bear to let them go now.
Former tech heroes Tesla, Meta Platforms (formerly known as Facebook), Amazon and Netflix went into meltdown last year, as did Bitcoin, Ether and the rest, in what many analysts saw as a long-term shift in sentiment and fortunes.
Both asset classes belonged to the pop-tastic era of endless fiscal and monetary stimulus, which died in last year's inflationary reality check.
Watch: US Federal Reserve chief warns of 'pain' in reducing inflation
Yet, shockingly, they are now topping the investment charts again.
Electric car maker Tesla is off like a rocket this year and is up 75 per cent.
Meta has rebounded more than 50 per cent, Amazon is up 30 per cent and Netflix has gained 25 per cent.
Meanwhile, the Nasdaq has jumped 18 per cent and the S&P 500 is up 10 per cent.
Bitcoin also started 2023 with a bullet, climbing more than 40 per cent in 2023 to top $23,500 early this month. Ether and Dogecoin are close behind, as cryptocurrencies make an even more unlikely comeback.
Even meme stocks are on the mend. Remember AMC Entertainment? It is up 55 per cent this year. GameStop? Up roughly a third.
There were indications this could happen last summer, when technology stocks and cryptocurrency prices started to sing during the short-lived bear market rally.
So, are investors taking one final trip on the nostalgia circuit or does this year’s risk-on recovery have staying power?
2023 is shaping up to be the opposite of last year, for better and for worse, says Ben Laidler, global market strategist at trading platform eToro.
Technology stocks and cryptocurrencies were hit hardest by last year’s inflationary storm, with Bitcoin down 65 per cent and the Nasdaq crashing 33 per cent.
They are now leading the relief rally and this is not simply based on wishful thinking, Mr Laidler says.
“US inflation has been falling for six months and the US Federal Reserve is within a whisker of stopping its dramatic rate hiking cycle, which is coming as a huge relief to stressed investors.”
Investors should not get too carried away because we have not reached the sunlit uplands yet.
“The US economy is set to grow just 1.4 per cent this year, with zero profit growth on the S&P 500,” Mr Laidler says.
Private investors saw the rebound coming, with eToro surveys showing twice as many buying than selling in the final quarter of 2022.
Their favoured asset classes? Cryptocurrencies and technology stocks.
Cryptocurrencies — in pictures
Investors are embracing risk again as inflation and interest expectations peak, but they are at risk of becoming complacent, says Vijay Valecha, chief investment officer at Century Financial.
“They are understandably enjoying the joyride after a rough year but should err on the side of caution.”
We now live in a very different world, as the Fed funds rate has climbed from a range of 0.25 per cent to 0.5 per cent last March to 4.5 per cent to 4.75 per cent today.
Markets expect two more rate increases and this means that early stage growth companies can no longer borrow money at rock-bottom rates based on the promise of profits tomorrow.
“Investors now assign more value to good-quality companies with a sound rationale and strong income prospects today,” Mr Valecha says.
Cryptocurrencies remain a “high-risk and speculative asset class”, while some US tech hopefuls are now classified as penny stocks after last year’s falls, he says.
“Investors should stick to good-quality names and not try to catch falling knives or make outsize bets on futuristic or niche technologies.”
Some risk is good but do not overdo it as a hawkish word from the Fed could dampen sentiment overnight, Mr Valecha adds.
Tech giants Apple, Amazon and Google-owner Alphabet delivered a check to bullish sentiment last week, as their earnings “disappointed in their own separate ways”, says Chris Beauchamp, chief market analyst at trading platform IG Group.
“Despite this, risk appetite seems to be solid and US equities have started to join in on the global rally amid hopes for a more upbeat performance next time.”
Others are even more optimistic, including Yves Bonzon, group chief investment officer at Julius Baer, who boldly states that we are now witnessing “a new bull cycle, not a bear rally”.
From a technical point of view, the rally is healthy, with broad participation across the index components, Mr Bonzon says.
“We have been saying for several months now that the bottom of the 2022 bear market was in October. We are not in a counter-trend rally but a new bull cycle.”
We have been saying for several months now that the bottom of the 2022 bear market was in October
Yves Bonzon,
group chief investment officer at Julius Baer
Naturally, there are still threats, such as a Covid-19 resurgence and war in Ukraine, but as inflation falls, markets should rise.
Everything now rests on the speed of what Mr Bonzon calls “disinflation” and how central banks respond.
In the US, the Fed has almost finished its work but does not want to signal a premature pause, while the European Central Bank is at risk of overdoing it and should resist “embarking on a path of excessive tightening that can only lead to another embarrassing reversal”, Mr Bonzon says.
Samuel Fuller, director of Financial Markets Online, says investors are now anxiously trying to second guess the Fed’s next move.
“Some market watchers are predicting interest rates could soon peak at 4.95 per cent. Ordinarily, all this would give a fillip to US equities but so far, markets have been whipsawing because of the ambivalent signals accompanying the Fed’s decision,” he says.
“This has left both the US dollar and stock markets in limbo as traders scramble to decode which of the contradictory signals to believe.”
Markets are likely to pause after their recent strong run, but investors who are too cautious risk making a classic mistake. History shows that the biggest returns are made in the early stages of a bull market.
As recent events have shown, when investors get their mojo back, we are likely to find them singing the same tunes as before.
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
Nepotism is the name of the game
Salman Khan’s father, Salim Khan, is one of Bollywood’s most legendary screenwriters. Through his partnership with co-writer Javed Akhtar, Salim is credited with having paved the path for the Indian film industry’s blockbuster format in the 1970s. Something his son now rules the roost of. More importantly, the Salim-Javed duo also created the persona of the “angry young man” for Bollywood megastar Amitabh Bachchan in the 1970s, reflecting the angst of the average Indian. In choosing to be the ordinary man’s “hero” as opposed to a thespian in new Bollywood, Salman Khan remains tightly linked to his father’s oeuvre. Thanks dad.
Indoor cricket World Cup:
Insportz, Dubai, September 16-23
UAE fixtures:
Men
Saturday, September 16 – 1.45pm, v New Zealand
Sunday, September 17 – 10.30am, v Australia; 3.45pm, v South Africa
Monday, September 18 – 2pm, v England; 7.15pm, v India
Tuesday, September 19 – 12.15pm, v Singapore; 5.30pm, v Sri Lanka
Thursday, September 21 – 2pm v Malaysia
Friday, September 22 – 3.30pm, semi-final
Saturday, September 23 – 3pm, grand final
Women
Saturday, September 16 – 5.15pm, v Australia
Sunday, September 17 – 2pm, v South Africa; 7.15pm, v New Zealand
Monday, September 18 – 5.30pm, v England
Tuesday, September 19 – 10.30am, v New Zealand; 3.45pm, v South Africa
Thursday, September 21 – 12.15pm, v Australia
Friday, September 22 – 1.30pm, semi-final
Saturday, September 23 – 1pm, grand final
Anghami
Started: December 2011
Co-founders: Elie Habib, Eddy Maroun
Based: Beirut and Dubai
Sector: Entertainment
Size: 85 employees
Stage: Series C
Investors: MEVP, du, Mobily, MBC, Samena Capital
VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
The specs: 2018 Jeep Compass
Price, base: Dh100,000 (estimate)
Engine: 2.4L four-cylinder
Transmission: Nine-speed automatic
Power: 184bhp at 6,400rpm
Torque: 237Nm at 3,900rpm
Fuel economy, combined: 9.4L / 100km
The specs
Engine 60kwh FWD
Battery Rimac 120kwh Lithium Nickel Manganese Cobalt Oxide (LiNiMnCoO2) chemistry
Power 204hp Torque 360Nm
Price, base / as tested Dh174,500
Like a Fading Shadow
Antonio Muñoz Molina
Translated from the Spanish by Camilo A. Ramirez
Tuskar Rock Press (pp. 310)
SPEC%20SHEET%3A%20APPLE%20IPAD%20PRO%20(12.9%22%2C%202022)
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FFP EXPLAINED
What is Financial Fair Play?
Introduced in 2011 by Uefa, European football’s governing body, it demands that clubs live within their means. Chiefly, spend within their income and not make substantial losses.
What the rules dictate?
The second phase of its implementation limits losses to €30 million (Dh136m) over three seasons. Extra expenditure is permitted for investment in sustainable areas (youth academies, stadium development, etc). Money provided by owners is not viewed as income. Revenue from “related parties” to those owners is assessed by Uefa's “financial control body” to be sure it is a fair value, or in line with market prices.
What are the penalties?
There are a number of punishments, including fines, a loss of prize money or having to reduce squad size for European competition – as happened to PSG in 2014. There is even the threat of a competition ban, which could in theory lead to PSG’s suspension from the Uefa Champions League.
RESULTS
6.30pm Al Maktoum Challenge Round-2 – Group 1 (PA) $49,000 (Dirt) 1,900m
Winner RB Frynchh Dude, Pat Cosgrave (jockey), Helal Al Alawi (trainer)
7.05pm Al Bastakiya Trial – Conditions (TB) $50,000 (D) 1,900m
Winner El Patriota, Vagner Leal, Antonio Cintra
7.40pm Zabeel Turf – Listed (TB) $88,000 (Turf) 2,000m
Winner Ya Hayati, Mickael Barzalona, Charlie Appleby
8.15pm Cape Verdi – Group 2 (TB) $163,000 (T) 1,600m
Winner Althiqa, James Doyle, Charlie Appleby
8.50pm UAE 1000 Guineas – Listed (TB) $125,000 (D) 1,600m
Winner Soft Whisper, Frankie Dettori, Saeed bin Suroor
9.25pm Handicap (TB) $68,000 (T) 1,600m
Winner Bedouin’s Story, Frankie Dettori, Saeed bin Suroor
COMPANY PROFILE
Company name: SimpliFi
Started: August 2021
Founder: Ali Sattar
Based: UAE
Industry: Finance, technology
Investors: 4DX, Rally Cap, Raed, Global Founders, Sukna and individuals
The specs
Engine: 3.0-litre 6-cyl turbo
Power: 374hp at 5,500-6,500rpm
Torque: 500Nm from 1,900-5,000rpm
Transmission: 8-speed auto
Fuel consumption: 8.5L/100km
Price: from Dh285,000
On sale: from January 2022
FFP EXPLAINED
What is Financial Fair Play?
Introduced in 2011 by Uefa, European football’s governing body, it demands that clubs live within their means. Chiefly, spend within their income and not make substantial losses.
What the rules dictate?
The second phase of its implementation limits losses to €30 million (Dh136m) over three seasons. Extra expenditure is permitted for investment in sustainable areas (youth academies, stadium development, etc). Money provided by owners is not viewed as income. Revenue from “related parties” to those owners is assessed by Uefa's “financial control body” to be sure it is a fair value, or in line with market prices.
What are the penalties?
There are a number of punishments, including fines, a loss of prize money or having to reduce squad size for European competition – as happened to PSG in 2014. There is even the threat of a competition ban, which could in theory lead to PSG’s suspension from the Uefa Champions League.
Company%20Profile
%3Cp%3E%3Cstrong%3EName%3A%3C%2Fstrong%3E%20Raha%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202022%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Kuwait%2FSaudi%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Tech%20Logistics%3Cbr%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20%2414%20million%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Soor%20Capital%2C%20eWTP%20Arabia%20Capital%2C%20Aujan%20Enterprises%2C%20Nox%20Management%2C%20Cedar%20Mundi%20Ventures%3Cbr%3E%3Cstrong%3ENumber%20of%20employees%3A%3C%2Fstrong%3E%20166%3C%2Fp%3E%0A
THREE
%3Cp%3EDirector%3A%20Nayla%20Al%20Khaja%3C%2Fp%3E%0A%3Cp%3EStarring%3A%20Jefferson%20Hall%2C%20Faten%20Ahmed%2C%20Noura%20Alabed%2C%20Saud%20Alzarooni%3C%2Fp%3E%0A%3Cp%3ERating%3A%203.5%2F5%3C%2Fp%3E%0A
Results
Women finals: 48kg - Urantsetseg Munkhbat (MGL) bt Distria Krasniqi (KOS); 52kg - Odette Guiffrida (ITA) bt Majlinda Kelmendi (KOS); 57kg - Nora Gjakova (KOS) bt Anastasiia Konkina (Rus)
Men’s finals: 60kg - Amiran Papinashvili (GEO) bt Francisco Garrigos (ESP); 66kg - Vazha Margvelashvili (Geo) bt Yerlan Serikzhanov (KAZ)
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3ESupy%0D%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2021%0D%3Cbr%3E%3Cstrong%3EFounders%3A%20%3C%2Fstrong%3EDani%20El-Zein%2C%20Yazeed%20bin%20Busayyis%2C%20Ibrahim%20Bou%20Ncoula%0D%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EDubai%0D%3Cbr%3E%3Cstrong%3EIndustry%3A%20%3C%2Fstrong%3EFood%20and%20beverage%2C%20tech%2C%20hospitality%20software%2C%20Saas%0D%3Cbr%3E%3Cstrong%3EFunding%20size%3A%20%3C%2Fstrong%3EBootstrapped%20for%20six%20months%3B%20pre-seed%20round%20of%20%241.5%20million%3B%20seed%20round%20of%20%248%20million%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EBeco%20Capital%2C%20Cotu%20Ventures%2C%20Valia%20Ventures%20and%20Global%20Ventures%3C%2Fp%3E%0A
