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From Kylie Purcell – investments editor at Finder

There’s no doubt that COVID-19 has had an enormous impact on markets the world over, as investors scramble to find a good place to keep their money.

With some analysts pegging 2020 as the start of “The Greater Depression”, it’s no wonder that global markets are seeing unprecedented volatility. And as stock markets fall, savings rates stall and property prices appear grim, you’d be forgiven for thinking the future of your investments was on a knife’s edge.

But don’t forget that during times of adversity you’ll find some of the best opportunities, and nowhere is this more evident than in the investment world. While Australia’s stock market (S&P/ASX200 index) has plunged as much as 34% since February, investors have never been more active.

Between February and April, more than 4,000 Australians a day signed up to investment platforms to take advantage of the lower prices, an increase of more than 300% compared to previous months, according to the latest ASIC data.

At the same time, not all markets have performed badly during the pandemic. In fact, some assets have rallied this year, hitting record highs, despite (or rather because of) fears of an impending recession.

Which markets are winning?

During times of economic uncertainty, money tends to move out of riskier assets such as stocks and into “safe-haven” investments like gold, bonds and even cash.

With interest rates at record lows and political power plays continuing to disrupt global trade, the Australian price of gold has been on a rapid ascent since late last year. In late March, gold hit an all-time record high, bolstered by fears of a global economic slowdown and concerns that currencies could be devalued by a wave of COVID-19 stimulus packages.

When monetary systems have failed us in the past, it’s historically gold that we’ve fallen back on. So when central banks start lowering interest rates in a bid to jump-start slowing economies, the price of gold usually moves in the opposite direction.

Although precious metals such as silver, gold and platinum sometimes have a tendency to run together, the nature of the pandemic has left a number of these markets in a much more vulnerable position.

The prices of palladium and platinum, for example – metals commonly used in car parts – have rallied in the last 12 months, only to hit a wall when COVID-19 struck. While palladium hit a record high in February, both metals fell by around half in March, as investors weighed how the pandemic would impact both supply and demand.

Which markets have been the worst hit?

The energy sector has been one the hardest hit during the COVID-19 pandemic, for a number of reasons.

The pandemic was already bad news for the oil sector, but the situation worsened after a price war erupted between Russia and Saudi Arabia on the back of a failed OPEC (Organisation of the Petroleum Exporting Countries) meeting in late February. By late April, US crude oil price futures had fallen below $0 for the first time in history, as the market became flooded and demand for fuel plummeted.

With planes, vehicles and manufacturing plants no longer needing the usual supply of oil and gas, producers – even countries including Australia – have needed to pay just to keep their barrels in storage.

This volatility in the oil sector has also been bad news for the stock market, with some investors fearing that energy company defaults could lead to a broader credit crunch. After news of OPEC tensions in March, Australia’s ASX200 index saw its biggest one-day fall since the GFC (-7.4%), followed by its fastest drop into a bear market in history in the following weeks.

At the same time, oil company share prices such as Oil Search, BHP Ltd and Woodside Petroleum fell by as much as half.

The unknowns

Other investment markets such as property have been slower to react, and it still remains to be seen how they will move. The latest numbers from property consultant CoreLogic show that property prices fell sharply in April compared to March, but still rose overall by 0.3%.

With Australia’s immigration and tourism numbers drying up and unemployment at record highs, economists predict that we could see property and rental price falls across major cities. In a “worst-case scenario” offered by CBA last week, prices could fall as much as 30% by 2022. Commercial real estate is also under pressure, as companies will likely question the need to have their workers sitting in expensive CBD offices.

This all sounds pretty gloomy, but at the end of the day, any market that has fallen is an opportunity for new investors to potentially scoop up a bargain.

Falling property prices are undoubtedly bad news for existing investors, yet they may also be the much-needed hand that young Australians needed to get their foot on the property ladder. And while oil and stock prices are hitting multi-year lows, savvy share market investors are seeking out good quality companies and exchange traded funds to prepare for a stock market recovery.

Long story short, nobody really knows what will happen after the COVID-19 pandemic, but history tells us that even in the direst of circumstances (think both World Wars), markets tend to recover eventually.

Kylie Purcell is the investments editor at Finder. These are the views of Finder and not Raiz. 


Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

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Important Information

The information on this website is general advice only. This means it does not consider any person’s investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the Raiz product.

The information in this website is confidential. It must not be reproduced, distributed or disclosed to any other person. The information is based on assumptions or market conditions which change without notice. This will impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz.

Past return performance of the Raiz product should not be relied on for deciding to invest in Raiz and is not a good predictor of future performance.

bitcoin-trophy-against-prices

We all have that one mate (or several) that cannot keep their mouth shut about Bitcoin (BTC). If you are struggling to think of which friend that may be, chances are that person is you. Irrespective of your personal affinity for the cryptocurrency, Raiz has released the Sapphire portfolio with a target weight of 5% towards Bitcoin. We explore below what this means for casual and serious crypto investors alike.

Here are 3 things we think you should know before choosing the Sapphire portfolio.

It’s very risky: The wins could be big, but the losses could also be bigger.

The first and most important thing to know is this – cryptocurrencies such as Bitcoin and Etherium are extremely risky and volatile. At time of publishing, the price of Bitcoin sits at $13,435.10 AUD and will most likely change dramatically again by the time you have refresh this post.

Many of the risks associated with Bitcoin are not the same risks you would experience on a normal financial exchange, such as a stock market, so it’s important to read our product disclosure document which provides more information about the risks, fees and costs.

The Sapphire portfolio will not be suitable for everyone, but if you are interested in buying Bitcoin for the long term and understand the risks, then Sapphire may be suitable for you. The suggested minimum investment timeframe is 5 years for an alternative asset class such as this, so you should consider both your personal risk tolerance (and patience!) before deciding if Sapphire is suitable for you.

Takeaway: Sapphire is very risky – only do it if you are prepared to hold steady through its peaks and troughs.

It’s about choice: Sapphire is 1 of 7 portfolio options within Raiz.

After 18 months of research, and development by the Raiz team, Sapphire is now an option for customers looking to introduce Bitcoin into their investment portfolio (excluding superannuation). Millennials are typically the biggest global drivers of crypto investment, and with most Raiz investors falling into that age group, it’s no wonder that the appetite for a BTC portfolio has been growing.

CEO George Lucas also observes that “…the Sapphire portfolio is another example of Raiz listening to our customers and giving them choice and control over where they invest, especially as we emerge from the COVID-19 pandemic and they want to re-examine their investment options.”

Put simply, Sapphire gives you the option to dip a toe in the water with investing in Bitcoin.

Takeaway: At your next dinner party, it may be worth mentioning Sapphire to that one mate who always talks but never does anything about “getting into crypto”.

It’s simple: Raiz is not a trading tool, so Sapphire is a secure way to get Bitcoin exposure without the complexities of trading.

With a target 5% asset allocation, the Sapphire portfolio provides investors a chance to reap the potential of Bitcoin while limiting their exposure in a risk-adjusted way. Diversification is a central pillar to smart investing, so if you are looking to introduce cryptocurrency into your long term strategy, Sapphire may be one way to bring Bitcoin into your portfolio without the overheads of currency trading.

Raiz also uses the Gemini Exchange to buy, sell and store Bitcoin, a world leading cryptocurrency exchange that is regulated by the New York State government. You can read more about Gemini here.

Takeaway: It’s hard work to buy Bitcoin – Sapphire let’s you micro-invest in Bitcoin without the trading.

Before deciding to invest you must read the product disclosure statement to understand the risks, cost and fees associated with the Sapphire portfolio.  To preview the Sapphire portfolio, visit the portfolio page in your Raiz app.

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Click here to open your portfolio settings.

Important Information

The information on this website is general advice only. This means it does not consider any person’s investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the Raiz product.

The information in this website is confidential. It must not be reproduced, distributed or disclosed to any other person. The information is based on assumptions or market conditions which change without notice. This will impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz.

Past return performance of the Raiz product should not be relied on for deciding to invest in Raiz and is not a good predictor of future performance.

bitcoin

Media Release

Raiz Invest, Australia’s leading micro-investing app, will offer investors exposure to Bitcoin with the launch of its seventh investment portfolio that will have a five per cent target allocation to this alternative asset class.

The new portfolio, called Sapphire, has taken 18 months to develop, and has been specifically designed to meet growing customer appetite for exposure to the alternative asset class of cryptocurrency. Aside from Bitcoin, the remaining 95% of the portfolio will comprise US, Australian, European, and Asian large-cap stocks, as well as the Australian corporate debt and money markets, all via exchange-traded funds (ETFs).

Raiz CEO George Lucas says: “Although this latest portfolio offering from Raiz is very high risk, feedback from many customers has clearly shown that they have an appetite for an investment strategy that has an exposure to cryptocurrencies, and the Sapphire portfolio has been designed with this in mind.

“The investment objective of the Sapphire portfolio is to provide exposure to Bitcoin in a managed, risk-adjusted way. The minimum suggested investment timeframe is more than five years.

“Many of our investors are Millennials, who have time on their side when adopting an investment choice such as the Sapphire portfolio for the long term.

“A December 2019 report by the US stockbroker Charles Schwab revealed that while stalwart companies ranked among the top investment picks for Baby Boomers and Generation Z, Millennials were more inclined to put money into crypto assets.”

Financial advisers are showing an increasing interest in Bitcoin for their clients’ portfolios, according to some recent overseas surveys, although only a small number of financial advisers recommend it.  With governments printing more money globally due to the COVID-19 crisis, cryptocurrencies such as Bitcoin may play a more important role in a client’s portfolio in the future.

Since launching its first investment portfolios in 2016, Raiz has embarked on a deliberate strategy to listen to its customers and deliver investors a selection of investment portfolios, ranging from conservative to aggressive.

The Emerald portfolio was launched in 2017 to cater for investors wanting their investments to be socially, ethically, and environmentally responsible, again based on customer feedback.

Lucas says: “The Sapphire portfolio is another example of Raiz listening to our customers and giving them choice and control over where they invest, especially as we emerge from the COVID-19 pandemic and they want to re-examine their investment options.”

Raiz will trade and store Bitcoin with Gemini, a cryptocurrency exchange and custodian founded by the Winklevoss twins. Gemini is a New York Trust company regulated by the New York State Department of Financial Services. It is one of the safest cryptocurrency exchanges and custodians in the world.

Jeanine Hightower-Sellitto, Gemini Managing Director of Operations, says: “Raiz is advancing micro-investments via its new portfolio that provides customers an opportunity to invest in Bitcoin in a thoughtful, regulated manner. We are excited Raiz has selected Gemini as the trusted cryptocurrency exchange and custodian to support this portfolio launch and to help further the adoption of this asset class in the Australian market.”


Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

download-raiz-app
Click to download the Raiz app

Important Information

The information on this website is general advice only. This means it does not consider any person’s investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the Raiz product.

The information in this website is confidential. It must not be reproduced, distributed or disclosed to any other person. The information is based on assumptions or market conditions which change without notice. This will impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz.

Past return performance of the Raiz product should not be relied on for deciding to invest in Raiz and is not a good predictor of future performance.

Raiz Market Insights

25-05-20

From George Lucas, Raiz CEO

China unveils new COVID-19 stimulus measures

This week saw China pledge $500 billion worth of fiscal stimulus measures to support its economy as part of a bid to soften the impact of the coronavirus pandemic on livelihoods by creating nine million jobs and ensuring local governments can function.

While the stimulus measures announced by Beijing are good news for the China economy and global economic recovery, an escalation in political tensions in Hong Kong, and between China and the US, risks undermining the current rebound we’re seeing in equity markets.

Indeed, we saw this week that news of the large-scale fiscal stimulus package in China was overshadowed by Chinese authorities revealing plans for a new national security law in Hong Kong. That led to the Hang Seng index registering its worst trading day in five years, falling by 5.6 per cent.

Hong Kong could be flashpoint in US-China stoush

Still on Hong Kong, there’s a risk is that the former British colony now becomes another source of conflict between China and the US as tensions escalate between the superpowers.

Recently, US-China tensions have been rising amid recriminations about the coronavirus and renewed efforts by the US to stymie Huawei, a Chinese telecoms firm. Hong Kong could potentially be the next front in the White House’s aggressive approach to Beijing.

If the trade war does restart with Hong Kong as a flashpoint, equities in Hong Kong and the rest of Asia are likely to suffer, while the renminbi will probably also come under pressure as occurred last year when the US imposed tariffs on Chinese goods.

China’s ongoing encroachment on Hong Kong autonomy is also making it a less attractive place to do business, damaging its economy and undermining its role as a financial centre.

US-China trade war could be here to stay

In any case, US-China tensions are likely to remain high for some time as it seems to serve leaders on both sides as a distraction from COVID-19 and resulting economic hardship. US President Donald Trump in particular seems to think the dispute can help him win re-election in November when Americans go to the polls.

However, it’s unclear what Australian Prime Minister Scott Morrison is thinking as Australia, too,

becomes caught up in the US-China flare-up, with a recent ban on beef exports and tariffs on barley exports to China.

Thankfully, Australian iron ore and coal have been left alone so far, but it’ll become a major issue for Australia’s economic recovery if China makes our iron ore and/or coal less attractive with little effect on China, except higher pollution.

Signs of emerging markets rally in wake of coronavirus

Looking elsewhere, MSCI’s World Index of developed market equities has risen by almost 30 per cent from its low on 23 March, recouping more than half its initial losses faster than in any previous bear market. Despite the scale of the current economic shock, the index is now trading around the same levels as in mid-2019, which is good news.

However, even though lockdown measures are slowly being lifted in many countries, the latest global PMI survey data point to only limited signs of recovery in the global economy.

At 30.5, the eurozone composite PMI is still consistent with economic activity contracting in May. It’s a similar story for the UK and the US. For equities, the aggregate composite PMI for the major developed economies, at face value, suggests equities should be lower than they are presently.

Future PMI reports will be in spotlight

Nonetheless, the PMIs have at least improved in May and we are hopeful that Q2 will mark the trough in activity. Equity investors are obviously of a similar view.

Looking ahead, assuming that the virus outbreak is slowly brought under control in the coming months  and economies gradually continue to re-open in that time, the rally in equities may have further to run.

Bearing all this in mind, the strength of global equities may not be as irrational as it first appears based on incoming economic data.


Important Note: The information on this website is provided for the use of licensed financial advisers only. The information is general advice and does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this website.

Investors only: The information in this Document is confidential it must not be reproduced, distributed or disclosed to any other person unless it is part of their statement of advice. The information may be based on assumptions or market conditions and may change without notice. This may impact the accuracy of the information. In no circumstances is the information in this Document to be used by, or presented to, a person for the purposes of making a decision about a financial product or class of products.

General advice warning: The information contained in this Document is general information only. It has been prepared without taking account any potential investors’ financial situation, objectives or needs and the appropriateness of this information needs to be considered in that context. No responsibility or liability is accepted by Instreet or any third party who has contributed to this Document for any of the information contained herein or for any action taken by you or any of your officers, employees, agents or associates.

Tis the season again folks – Click Frenzy starts 7pm, 19th of May 2020. Many of our Raiz Rewards partners are participating in this limited time online sale. That means you can get money reinvested into your Raiz account on top of the Click Frenzy deals.

Here are just SOME of the best deals our Raiz Rewards partners are offering (more retailers to launch at 7pm on the do so be sure to check the app). Don’t forget to login to your Raiz account via the mobile or web app then click the “SHOP ONLINE HERE” links so we can track your rewards.

2XU – 3.5% reinvested with 30% Off Almost Everything! Online only.

Adairs – 4.2% reinvested with 25% off sitewide and Free Shipping plus Linen Lover’s receive an extra 5% off

Adore Beauty – Up to 4.2% reinvested with Save up to 20% on selected brands for 2 days only!

ASICS – 7% reinvested with 25% off selected styles

Bally – 7% until 20/5/20 reinvested. Enjoy up to 50% off the Bally™ Spring/Summer 2020 collection including shoes, accessories and ready-to-wear.
Free shipping & returns. A limited-time offer

bellabox – 17.5% reinvested with 20% off for 20 hours. Shop limited edition, shop items and new subscriptions. Delivered to your door 🤍 Use code: 2020VISION

Ben Sherman – 4.2% reinvested with 40% off sitewide

Best&Less – 3.% reinvested with 20% off sitewide, hurry 4 days only!

Billini – 5.6% reinvested with 20% off everything

BNKR – 6.3% until 21/5/20 reinvested with 30% off sitewide with code BNKRFRENZY (excluding Final Sale)

Bonds – 5.6% reinvested with up to 80% off. Over 1,000 styles to choose from.

Boohoo – 5.6% until 20/5/20 reinvested with SHOPPING FRENZY 50% off EVERYTHING (excl. sale)

Bras N Things – Up to 3.78% reinvested with 20% off Sitewide with code FRENZY20 – Only for 3 Days!

CAT Workwear – 5.6% reinvested with 20% off sale items

Catch.com.au – Up to 2.8% reinvested with Click Frenzy Mayhem Save 50-90%.

Charles Tyrwhitt – 5.6% reinvested with 3 Shirts for $149 with code FRENZY

City Beach – 6.3% reinvested with Frenzy Sale – Up to 70% OFF!

Clarks – 7% reinvested with 30 – 70% off sitewide.

Coach – 4.2% reinvested with up to 50% off select styles

Cotton On – Up to 6.3% reinvested 30-50% off sitewide

ECCO – 4.9% reinvested with 20% off sitewide at ECCO, with brand new boots and sneakers online now.

ECHT – 7% reinvested with 20% Off sitewide

Forever New – 4.2% reinvested with a further 40% Off Sale Items with coupon code TAF40.

Fossil – 5.6% reinvested with 20% off everything with code MAYHEM20

General Pants – 2.8% reinvested with 30% OFF* Storewide! Enter FRENZY30 at checkout. Ends 21/5/20 T&Cs Apply.

Glassons – 5.6% reinvested with 20% off sitewide

Hallenstein Brothers – 5.6% reinvested with 25% off sitewide including sale

Harris Scarfe – 3.5% reinvested with 50% off all Homewares & Manchester. Excludes Electrical & HS Everyday. 40% off all Men’s & Women’s Underwear, Sleepwear, Sporting & Footwear. Excludes HS Everyday. 40% off Men’s & Women’s clothing. Excludes HS Everyday”

HP – 2.5% reinvested with 20%* on selected HP laptops + loads more HOT deals across HP accessories, desktops, OMEN, and refurbished products!

Hype DC – Up to 3.5% reinvested with 20% off sitewide

Jo Mercer – 4.2% reinvested with 25% off sitewide

Johnny Bigg – Up to 4.9% reinvested with 40% Off* Sitewide + Free Shipping.

Kogan – 1.26% first purchase reinvested with the Kogan “Frenzy” offers

Lacoste – 5.6% until 20/5/20 reinvested with up to 50% off sitewide

Lee – 5.6% until 21/5/20 reinvested with up to 50% off select items

Lorna Jane3.5% reinvested with 20% OFF Full Price Jackets & Hoodies, Lornajane.com.au. Discount applied at cart, 24hrs only.

Nasty Gal – 5.6% reinvested with FASHION FRENZY 60% Off everything inc sale.

Nautica – 4.2% reinvested with 40% off sitewide

New Balance – 4.2% reinvested with Receive 40% off all Full Priced Items at New Balance when you use code MAYHEM40

Nine West – 4.2% reinvested with Take 30% Off Full Priced Styles – Applies At Checkout To Full Priced Styles

Peppermayo – 7% reinvested with 30% off sitewide

Platypus AU – Up to 5.6% reinvested with 20% off sitewide

Review – 5.25% reinvested with 30% off storewide. Excludes outlet styles. Discount applied at checkout.

Riders by Lee – 5.6% until 21/5/20 reinvested with up to 50% off select items

Saucony – 5.6% reinvested with 20% off sitewide

Skechers AU – Up to 5.6% reinvested with 20% off sitewide

Speedo – 4% reinvested with a further 20% off Sale items

Stylerunner – 5.6% reinvested with Stylerunner Fit Frenzy Sale – Up to 30% Off

Superdry – 4.9% reinvested with 20-60% Off Sitewide!

THE ICONIC – 3.5% invested with 30% off selected sport and fashion styles.

The North Face – 4.2% reinvested with Sale Frenzy – Up to 30% off select new season styles

Timberland – 5.6% reinvested with 20% off sitewide

Tony Bianco – 7% reinvested with 30% Off Storewide at Tony Bianco.

UGG – 5.6% reinvested with up to 50% Off | New markdowns added

Under Armour – 5.6% reinvested with 30% Off Sitewide, including outlet. Excludes: Rock SS20, Technology, Curry Men’s, Golf, Selected Sonic, Selected Phantom SE

Witchery – 3.15% reinvested with 20% off Almost Everything.

Wrangler – 5.6% reinvested with 30% off sitewide

*Please refer to all T&Cs including promo codes and time periods for each individual offer on the Click Frenzy or retailer’s website.

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Click here to start shopping

Raiz Market Insights

12-05-20

From George Lucas, Raiz CEO

Making sense of rising equities despite COVID-19

Last week global equities continued their rapid rebound despite the COVID-19 pandemic and dismal news on the state of the global economy.

While equities plunged after coronavirus hit in February, the US equity market as measured by the S&P 500 has risen by almost 30 per cent from its intraday low on 23rd March and is now trading around the same levels as in mid-2019.  Other global markets have also recovered but not as quickly as the S&P 500.

The worst is likely yet to come in terms of the economic data, but so far, bad data has not stopped the equity markets globally, from rallying.

Investors confident of quick economic recovery

Two key factors appear to underpin this rally in equities. The first is that investors are looking through the bleak near-term outlook and focusing on the prospect of a quick economic recovery in the second half of the year, once the pandemic is brought more under control.

The second factor is the massive fiscal and monetary policy response to the virus-induced economic shock. Central banks, led by the US Federal Reserve, have gone to extraordinary lengths to backstop the financial system and shore up asset markets.

The fiscal support packages put in place by most major countries, as well, are far larger than anything seen before in peacetime. More importantly, expectations that monetary policy will be kept extremely loose for years to come have boosted equity prices.

However, key downside risks remain as nations move into the recovery stage, including secondary virus outbreaks as economies reopen, a long U-shaped recovery, or a breakdown in the consensus for maintaining policy support both fiscal and/or monetary policy support.

Underperformance in emerging markets

One feature of the recent rally has been the underperformance of equities in emerging markets relative to those in developed markets.

One big reason for the underperformance of emerging markets equities has been the collapse in commodity prices, with the GSCI’s index of industrial metals has dropped by 10 per cent over this period. The fall in commodity prices has hit EM equities disproportionally.

The underperformance of emerging markets equities has also coincided with the number of coronavirus cases rising more sharply in emerging markets than developed markets since mid-March. Another factor has been the relentless outperformance of US equities, which has been driven by the five largest listed stocks, mainly in Tech, in the US.

US-China trade war at risk of flare-up

Last week also saw signs of a re-escalation in trade tensions between the US and China led by President Trump when he said that he was “watching closely” to see if China was living up to trade-deal commitments to purchase large quantities of US goods.

President Trump seems to view putting pressure on China as a vital part of his strategy ahead of November’s election. With his approval rating now standing at just 43 per cent, it is likely that tensions with China could remain high, at least until the US election is over.

For equities, if the previous trade war is anything to go by, another stoush would benefit equites in the US while hitting those in China and the rest of emerging markets.


Important Note: The information on this website is provided for the use of licensed financial advisers only. The information is general advice and does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this website.

Investors only: The information in this Document is confidential it must not be reproduced, distributed or disclosed to any other person unless it is part of their statement of advice. The information may be based on assumptions or market conditions and may change without notice. This may impact the accuracy of the information. In no circumstances is the information in this Document to be used by, or presented to, a person for the purposes of making a decision about a financial product or class of products.

General advice warning: The information contained in this Document is general information only. It has been prepared without taking account any potential investors’ financial situation, objectives or needs and the appropriateness of this information needs to be considered in that context. No responsibility or liability is accepted by Instreet or any third party who has contributed to this Document for any of the information contained herein or for any action taken by you or any of your officers, employees, agents or associates.

Raiz market and economic update

27-04-20

From George Lucas, Raiz CEO

Economic impacts of COVID-19 becoming clearer

The world remains gripped by the COVID-19 crisis as the economic impact of government lockdowns globally are becoming clearer. Equity markets, which look 12 to 18 months ahead, are currently anticipating a swift recovery, while the economic data illustrates the significant impact to global unemployment and growth in the last few months.

GDP in China fell by 6.8 per cent year-on-year in the first quarter of 2020 — the first quarterly contraction since records began there in 1992. On a sector-by-sector basis, hospitality, retail and construction contracted at a double-digit pace, while IT and finance continued to grow.

In the US, a negative sign for the global superpower’s economy was the market price of WTI crude oil, which turned negative last week for the first time in history. This was caused by very weak demand and nowhere to store the excess oil.

Employment around the world falls

On the jobs front in the US, there was a further decline in initial US jobless claims to 4,427,000 last week. The data is consistent with the official jobless rate nearing 20 per cent in April. The jobs data coming out of the US is consistent with GDP declining at a 12 per cent annualised pace.

In Australia, the unemployment rate will likely jump as a result of job losses due to COVID-19 lockdown. However, the federal government’s JobKeeper program will muddy the official jobless rate in Australia, which Treasury forecasts may nearly double from 5.1 per cent to 10 per cent by June.

While the jobs market is deteriorating, panic buying of groceries and toilet paper in Australia resulted in a massive 8.2 per cent month-on-month jump in retail sales in March.

In Germany, the IFO Business Climate Index fell to a record low in April, pointing to a very sharp drop in GDP. The German economy will hold up a little better than the eurozone average this year, but it still looks set to contract by about 8 per cent over the year.

Looking forward

The equity markets have priced in the recent bad economic data well, rallying significantly off their lows. The rate of recovery in the global economy will be closely watched by the markets as restrictions are slowly removed.

The equity markets may be able to continue to rally if the global economy’s recovery is swift enough to satisfy the market. However, for the next few months expect to see economic data which is exceptionally poor.


Important Note: The information on this website is provided for the use of licensed financial advisers only. The information is general advice and does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this website.

Investors only: The information in this Document is confidential it must not be reproduced, distributed or disclosed to any other person unless it is part of their statement of advice. The information may be based on assumptions or market conditions and may change without notice. This may impact the accuracy of the information. In no circumstances is the information in this Document to be used by, or presented to, a person for the purposes of making a decision about a financial product or class of products.

General advice warning: The information contained in this Document is general information only. It has been prepared without taking account any potential investors’ financial situation, objectives or needs and the appropriateness of this information needs to be considered in that context. No responsibility or liability is accepted by Instreet or any third party who has contributed to this Document for any of the information contained herein or for any action taken by you or any of your officers, employees, agents or associates.

raiz quarterly update

On 23 January 2020, when I gave my last update, the world was a very different place. Although COVID-19 (coronavirus) was gaining public attention, it certainly wasn’t a global health crisis affecting economic growth and investor sentiment around the world.

Today, Australia has been in lockdown for nearly a month and social isolation is the name of the game. Large sectors of the economy (notably tourism, hospitality, and much of retail) are closed for business and others are suffering.

We remain primarily concerned for the health, safety and wellbeing of our customers and staff during this period.

At Raiz we are weathering this difficult period.  We will soon report revenue from our Micro Investing Platform, that grew in the March quarter as we continue to increase the number of customers and activity on our platform.

Our business, which derives about two-thirds of its revenue from the $2.50 management fee, continues to retain the loyalty of our valued customers, and also add new customers. At 31 March 2020 we had 215,398 customers, up from 211,657 at 31 December 2019, despite the uncertainties caused by the Government lockdown.

For this outcome we can only offer you our sincere thanks. The team and I will work hard to meet your expectations and assist you in taking control of your finances in these difficult times.

That we can retain and increase customers during this quarter tells me a few things. Firstly, that the products and services we offer, and the customer service that accompanies them, still meet your expectations, even during this crisis. Customers are aware of the need for a robust savings plan to assist them in controlling their finances.

Rest assured we will continue to maintain the high level of service that you have come to expect. And continue to listen to your feedback to enhance our product offering and services.

Secondly, our customers are increasingly appreciating that investing can be a long-term game, and that despite the current volatility they understand the need to stay in the market, realising this crash may be the precursor of the next bull market.

Finally, that you understand that even during this extremely challenging period, Raiz’s financial management, rising revenues and the capital raised in December last year has put the business in a secure position that bodes well for its corporate future. This gives us a much-needed financial cushion in these troubled times.

Raiz entered the market to offer Australians, especially young Australians, a smart alternative to the established players in the financial services sector by putting control of their financial futures into the palms of their hands. The current crisis has not changed that.

So, during these uncertain times your ongoing commitment to savings and controlling your finances via Raiz is deeply humbling and a very promising sign for all our futures.

Again, my heart-felt thanks, and stay safe.

Sincerely,

George Lucas

Managing Director /CEO


Important Information

The information on this website is general advice only. This means it does not consider any person’s investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the Raiz product.

The information in this website is confidential. It must not be reproduced, distributed or disclosed to any other person. The information is based on assumptions or market conditions which change without notice. This will impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz.

Past return performance of the Raiz product should not be relied on for deciding to invest in Raiz and is not a good predictor of future performance.

water droplet ripple

If you’re starting out as an investor you may have heard about something called “liquidity”, but you may not be exactly sure what it is or what the term refers to.

That’s totally understandable as there are lots of concepts to come to grips with when you’re getting investing and it takes time to figure them all out.

The concept of liquidity is an important one to understand because in the context of financial markets it affects many aspects of how markets operate.

What is liquidity?

Simply put, liquidity refers to how easily an asset or security, such as shares, can be bought or sold in the market at a price reflecting its true worth, or in other words, its intrinsic value.

In a practical sense, this means that liquidity can be thought of as how easy it is to convert an asset to cash, which is considered the most liquid asset of all.

Assets can be placed on a scale from liquid to illiquid, depending on how easily they can be converted to cash. So-called tangible assets, like collectibles (cars, rare books etc) property and fine art, are considered relatively illiquid, while stocks are considered rather liquid.

Meanwhile, the liquidity of other assets such as contracts, currencies, commodities and derivatives commonly depends on how many players are in the market, their size and the amount of assets listed.

Characteristics of a liquid asset

Cash is considered the most liquid asset as it can be exchanged for goods and services instantly with no loss of value. In other words, you don’t have to wait for a suitable buyer of the cash and it can instantaneously be used to do things like selling, buying or paying down debt.

This contrasts with an illiquid asset that’s tough to sell unless you drop the price significantly. This could be to a lack of market actors (buyers and sellers) or to scepticism about the asset’s underlying value.

What’s market liquidity?

So, we’ve covered liquidity generally, but what about liquidity as it relates to the share market, or other financial markets. This is what’s generally known as market liquidity and it refers to how easy or hard it is for assets in a particular market to be bought and sold at stable prices reflective of true value.

The stock market is generally characterised by higher market liquidity meaning that, unless it is uncharacteristically dominated by selling, the bid price (the price a buyer offers per share) and the ask price (the price the seller is willing to accept) will be pretty close. One of the advantages of ETFs is their liquidity.

Watch out for illiquid markets

Liquid markets are usually a good thing. High levels of liquidity occur when there is a lot of trading activity and both high supply and demand for an asset, leading to less risk. But even in share markets, remember that some shares trade more actively than others on, meaning there is more of a market for them and they are more liquid than other, less traded, stocks.

By contrast, in an illiquid market, there may be only a few market participants and trading is infrequent, meaning that they carry higher risks. This is known as liquidity risk and becomes more prominent during times of market turmoil when holders of illiquid assets may find it hard to sell without losing a substantial amount of money.

The most widely known illiquid investments include hedge funds, property, private equity and infrastructure, and investing in these types of assets is usually not done by newbies.


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Important Information

The information on this website is general advice only. This means it does not consider any person’s investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the Raiz product.

The information in this website is confidential. It must not be reproduced, distributed or disclosed to any other person. The information is based on assumptions or market conditions which change without notice. This will impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz.

Past return performance of the Raiz product should not be relied on for deciding to invest in Raiz and is not a good predictor of future performance.

Raiz market and economic update

14-04-20

From George Lucas, Raiz CEO

Global COVID-19 emergency rolls on

This week COVID-19 continued to cause upheaval across the globe. In the US, another $2.3 trillion was added to stimulus measures aimed at softening the virus’ impact on the US economy. This time, the focus of the stimulus was corporates, giving the US Federal Reserve more fire power in buying up US corporate debt. Asian markets reacted well to this new stimulus.

More broadly, the size of the stimulus packages coming out of the US, Europe, UK and Australia dwarf the stimulus packages that were rolled out during the global financial crisis and indicate how significant the economic effect of COVID-19 will be on output and unemployment worldwide.

Stocks rally despite coronavirus pandemic

The unprecedented global impact of COVID-19 makes last week’s rebound in equity markets so surprising. On the plus side, the rally partly reflects hopes that the peak in pandemic may be close. On the other hand, large increases in equity prices are quite common after major corrections.

In short, it’s hard to read much into the rally. That’s because it’s difficult to determine how much economic bad news is currently priced into the market given the unprecedented fiscal stimulus currently propping up the global economy. Indeed, governments themselves are finding it hard to forecast the pandemic’s economic impact as the multiple rounds of stimulus being rolled out makes clear. Governments around the world are all playing catch up with COVID-19 at the moment.

When will the global economy recover?

Ultimately, COVID-19’s full economic impact will become clearer when social-distancing restrictions are wound back and business starts to get back to normal. It’s hard to predict when this will be.

Air travel provides a case in point. With airlines grounded due to COVID-19, the International Air Transport Association (IATA) has projected a possible hit to worldwide revenues of up to $113bn this year – 20 per cent of 2019’s total revenues. It’s far from certain when things will return to normal.

However, what is clear is that air travel will not return to anything resembling business as usual until a vaccine is readily available in 12 to 18 months’ time. Until that point, this will have flow-on effects for domestic airlines, hotels, restaurants, bars and any tourist related industry linked to international air travel.

Govts need to get COVID-19 response right

With so much uncertainty, the recent market rebound relies on the belief that governments are getting it right with their stimulus packages. That’s what largely occurred during the GFC.

But there’s no guarantee they are getting it right. This economic downturn is not a financial crisis, but a shut down in consumer ability to buy and travel.


Important Note: The information on this website is provided for the use of licensed financial advisers only. The information is general advice and does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this website.

Investors only: The information in this Document is confidential it must not be reproduced, distributed or disclosed to any other person unless it is part of their statement of advice. The information may be based on assumptions or market conditions and may change without notice. This may impact the accuracy of the information. In no circumstances is the information in this Document to be used by, or presented to, a person for the purposes of making a decision about a financial product or class of products.

General advice warning: The information contained in this Document is general information only. It has been prepared without taking account any potential investors’ financial situation, objectives or needs and the appropriateness of this information needs to be considered in that context. No responsibility or liability is accepted by Instreet or any third party who has contributed to this Document for any of the information contained herein or for any action taken by you or any of your officers, employees, agents or associates.

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