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Digital Gold Fever: Bitcoin Reaches Record Highs, Stocks Soar – Weekly Market Summary

The financial world experiences ups and downs every day. In order to give readers an insight into what is happening in the stock markets, “Delfi Bizness” offers a summary of the events of the week (26.02.-01.03).

Crypto fever

If at the beginning of last year it seemed that the era of crypto-currencies might be over, the rapid increase in the price of “Bitcoin” in recent days shows that the records seen in 2021 may fall this year, and the gold rush in the world of digital coins is back. The value of “Bitcoin” reached $64,000 on Wednesday evening, and on some cryptocurrency exchanges it was paying as much as $68,000 per coin. This is only 10 thousand from the historically highest value of “digital gold” that the world experienced in the fall of 2021, when both stocks and various other assets achieved extremely high results in the financial markets.

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The specter of privatization

The head of the government, Evika Siliņa, and other politicians have committed to “send” several state and municipal capital companies to the stock exchange in the name of promoting the capital market and strengthening the economy. The first candidate is the national airline “airBaltic”.

However, as the observations of “Delfi Bizness” show, this process has caused concern among more than one person that the privatization experienced in the 90s, which is often disparagingly referred to as “privatization”, which is associated with the acquisition of unfair companies, may be repeated. Therefore, experts mention several important aspects why these two processes are not as similar as it might seem.

As one of the most important reasons, the senior partner of ZAB “Eversheds Bitāns” Māris Vainovskis cites the fact that the “owner” of the company does not change. “As a result of the privatization of the 1990s, there was a change of ownership,” says Vainovskis, emphasizing that the current government plans clearly state that the controlling stake remains with the state.

“Investors are involved while maintaining state or local government control,” explains the expert, emphasizing that for this reason alone, these two processes cannot be compared.

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Japanese invasion

The story of the financial market of the wealthy Asian country has fascinated financial researchers for decades – it reached its peak in 1989 and then experienced a sharp decline, dragging many companies down with it. In contrast to the US and other major markets, which are growing rapidly after crises and regularly surpassing historical best indicators, Japan’s leading index has not been able to climb out of the hole for 34 years. This year, however, new records were finally achieved. Some ask if this is a bubble that will burst again, affecting the market for decades.

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Stop stereotyping

Very often we have to face the idea that a woman is basically a skilled spender of money and not an earner. Such a stereotype has consequences – in the minds of many employers, a female employee is paid less than an employee for performing similar work, because most likely she (as a “spender”) will not make such a valuable contribution to the company as an employee (“earner”), the widely heard stereotype is described by “SEB manager of the bank” in Latvia, Ieva Tetere.

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News from the world

  • Investors are rubbing their hands.Wall Street’s Nasdaq Composite rose 0.9% to a new record overnight Friday, and the Dow Jones Industrial Average and Standard & Poor’s 500 also advanced. This was due to the good performance of the US Personal Consumption Expenditure (PCE) price index. It is the Federal Reserve’s (FRS) favorite measure of inflation. PCE rose 2.4% year-over-year in January from 2.6% in December. This leads markets to speculate that an interest rate cut is on the way.
  • Will not compete with “Tesla”. The US technology company “Apple” has abandoned plans for the production of electric cars, thus putting an end to the ten-year project, American media reported.
  • India surprises. India has retained the title of the world’s fastest growing large economy as its growth reached 8.4% in the last three months of 2023.
  • Record high dividends. The Estonian investment company “Infortar” will pay a record-breaking amount of 61 million euros or three euros per share in dividends for the past year, according to the information provided by the company to the Tallinn Stock Exchange.
  • Stolen millions. After more than three months of investigation supported by external experts, the main phase of the internal investigation initiated by “BaltCap” regarding the violations of the former head of the “BaltCap” infrastructure fund, Šarunas Stepukoņis, has been completed. It reveals that the total amount defrauded from the fund’s portfolio companies is 40.4 million euros.
  • Latvia will overtake its neighbors. The gross domestic product (GDP) of Latvia could grow by 1.8% this year, showing the fastest economic growth in the Baltics, forecast the economists of the global risk management company “Coface”. Lithuania’s GDP is expected to grow by 1.6% this year, while Estonia’s is expected to decline by 0.4% for the second year in a row.
  • Bonds for 100 euros. One of the largest construction machinery rental companies in the Baltics, “Storent Holdings”, reports on the public offering of bonds for seven million euros. The bonds will have a fixed interest rate of 10%, and the price per unit is 100 euros.
  • Declaration time. In order to receive money more smoothly, “Delfi Bizness” has collected information that declaration submitters should know about the limits and the most frequent mistakes made by declaration submitters, which may delay refunds.
  • Gambling is not an investment. The saddest thing about both sportsbooks and lotteries is that they unfortunately give hope for a better life. However, the truth is that the “house” never loses, the financial literacy expert of the Bank of Latvia, Aija Brikše, emphasizes in the episode of the podcast “Science or nonsense” about the quick way to wealth.

Price fluctuations

High interest rates have their golden edge, says Gašpuitis

Last year, both experts and financial markets were convinced that in the spring of 2024 interest rates in both the US and the EU would fall. At the turn of the year, confidence faded, but the major stock markets continued to rise. Well, as “SEB banka” economist Dainis Gašpuitis says, not only the central banks do not plan to hurry with this, but also the question arises whether it will be done at all in the near future. He talked about this and other issues in the program “Nákotnes kapitals”.

‘Future capital’ portfolios

In 2021, the host of the program “Nákotnes kapitals” Konstantin Kuzikovs started investing 50 euros a week. He invests in stocks included in the “S&P 500” index, that is, large, billion-dollar US companies. Kuzikovs also started investing in Latvian government savings bonds. On the other hand, his colleague Raivis Vilūns invests in cryptocurrencies, companies traded on the Baltic Exchange and crowdfunding platforms. Investors have also joined the “robot” – “SEB’s” automated tool that invests money in exchange-traded electronic funds (ETFs). This is how all three portfolios fared last week:

  • Konstantin Kuzikov: +6.58%
  • Raivis Viluns: +23.16%
  • “SEB Roboinvestors”: +14,21%

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2024-03-02 08:00:03
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