2018 has started on a positive note. Despite widespread fears of a capital market upset caused by MiFID II coming into force on January 3rd, all remained calm and equity markets started with a positive week. This latest round of regulatory tightening across the EU’s securities markets will have some longer-term effects that may only become apparent further down the line. To create some clarity over what it might mean for private investors, we have dedicated an article to MiFID this week.
Geopolitical calming despite Korea and Iran
Geopolitical tensions garnered much attention this week. The new year began with a buttonmeasuring contest between two of the world’s most vocal leaders, after North Korean leader Kim Jong-Un used his annual New Year’s Day address to warn the US that his country’s nuclear capability was a reality, not a threat. The “button is right there on my desk,” Mr Kim told state TV. Not one to break from style, US President Trump took to twitter to retaliate against Kim’s warning, proclaiming that his button is “bigger & much more powerful” (!).
The UK economy – a fundamental assessment
The UK economy did worse than others in 2017. As of the end of September, real growth had slowed to 1.75%, while the rest of the western world accelerated.
Commodity linked investments have gone through a massive roller-coaster over recent years. Following the Financial Crisis, they were the darling of many investors and their ascent seemed unstoppable. When elevated commodity prices led to overinvestment and overcapacity in commodity exploration, the bubble burst. The subsequent collapse in commodity prices and cut backs in mining machinery then caused a temporary global economic slowdown.
MiFID II and its impact potential on investors
As widely reported in the media, the second derivative of the Markets in Financial Instruments Directive (MiFID) came into play as of the 3rd of January 2018. The first derivative, MiFID I, was introduced in the wake of the financial crises as a framework to protect investors and allow regulators to spot bubbles earlier. The latest instalment, MiFID II, moves the financial industry closer to the vision of a transparent market with clear rights and protections for EU citizens.
The “spectre” of Intel’s “meltdown”
The phrase “game changing” is perhaps thrown around too often. But this may end up accurately describing the impact of a fundamental design flaw present in PC, laptop and smartphone chips sold over the past decade. It could impact the entire semiconductor industry.
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