Here Jamie Johnson, CEO and Co-founder at FJP Investment, discusses with Finance Monthly the real impact of Brexit on the UK property market.

While it may seem like the country has ground to a standstill as the political standoff in Westminster continues, we cannot let this overshadow the activity and trends underpinning many of the UK’s leading sectors.

The property sector is a case in point – domestic and foreign investment continues to pour into the market, increasing house prices grow and in turn producing attractive investment opportunities. Recent research suggests that property investors also stand undeterred despite Brexit uncertainty –almost half (45%) of property investors have expanded their property portfolio since the EU referendum, whereas only 7% said they had sold one or more homes as a direct result of Brexit.

To understand why the UK continues to be a prime property hotspot despite the current state of political affairs, it can be valuable to reflect on how the sector has fared over the last two and a half years. This including understanding the key trends that have played a central role in shaping the real estate market.

Strong regional growth

In times of uncertainty or transitions, commentators like to take a keen interest into how different sectors are performing in London. As a cosmopolitan hub renowned for its residential and commercial real estate opportunities, the capital has faced some challenges. Since the EU referendum, house prices have largely stagnated, and in some postcodes even fallen.

However, focusing on primarily on London risks overlooking the progress taking place in regional markets. Indeed, national house prices have actually been on an upwards trajectory in recent months, driven largely by strong growth in places like the Midlands and North of England.

Birmingham (up 16%), Manchester and Leicester (both up 15%) have experienced the fastest rates of house price growth since the June 2016 referendum, followed by Nottingham (14%), Leeds (12%), Liverpool and Sheffield (both 11%). In real terms, this means that the average property in Birmingham now stands at £163,400, while the average house in Manchester costs around £168,000. For an investor, this attractive capital growth few assets can match.

So, what are the underlying reasons for these strong performances? Much of it comes down to large-scale regeneration projects which are reviving infrastructure, construction and transport links. Some of the construction works include the redevelopment of land close to new stations that are being created for High Speed 2 (HS2).

Property as an attractive asset class

Significant public and private investment is undoubtedly bolstering the sector, yet another important trend to note is the volume of property transactions taking place even at the height of Brexit uncertainty.

In January of this year – just weeks from the original Brexit deadline, and without a clear vision of what the UK’s transition from the EU would entail in practical terms – the number of transactions on residential properties with a value of £40,000 or greater was 101,170, or 1.3% more than a year prior.

This is testament to the underlying popularity of property as an asset class able to deliver long-term returns, and weather political and economic transitions. In fact, recent research revealed that Brexit hasn’t dampened investor sentiments towards property; the survey of over 500 property investors revealed that 39% plan to increase the size of their property portfolio in 2019, regardless of the ongoing negotiations.

Challenges facing the market

Notwithstanding the obvious challenges facing the UK – namely, setting out a clear direction for the future of the country outside of the EU – there are some pressing national priorities that also deserve attention.

Perhaps most important of all is the housing crisis. At present, there are simply not enough affordable and accessible houses on the market to meet growing demand. And while the government has set targets to address this issue, there is an overwhelming fear that these goals will ultimately fail to materialise.

Last year, Prime Minster Theresa May committed the government to delivering 300,000 new homes a year by the mid-2020s. Although a positive step in the right direction, the current pace of progress suggests that construction efforts will fall short of reaching this target.

Figures released by the housing ministry in March 2019 showed that building work began on 40,580 homes in England during the final quarter of 2018. This is down 8% on the previous three months. Further to this, a National Audit Office report recently concluded that half of councils are expected to miss house building targets.

While Brexit has largely taken priority over important issues, the Government cannot put off committing the necessary time and resources towards rebalancing housing supply and demand. Creative reforms are needed, and debt investment projects, such as off-plan property investments, are but one of the many solutions that could promote the construction of new-build properties.

Despite the current obstacles facing the property market, UK real estate has proven itself to be a resilient asset class even in times of hardship. Bricks and mortar remains a popular destination for domestic and international investment, and looking beyond the more immediate challenges lying on the horizon, it is important to recognise the resilience of property as a leading and desirable asset class.

In this article, we are going to have a look closely at the earnings per share formula – including why it is important, what it is used for, what it indicates, and how it can be worked out.

Earnings per share (commonly abbreviated to EPS) is a financial figure based on a calculation  that show the past profitability of a company, the present profitability of a company, as well as that profitability that it could experience in the future. The EPS can be calculated by first establishing the net income (the net income is the income that a company makes after overheads have been considered), and then dividing this number by the total number of outstanding shares that the company in question has. If you are new to the stock market and the world of investing, you may not know exactly what ‘outstanding shares’ refers to – it refers to the number of shares that a company has that are not held by them, for example those that are held by its various different types of shareholders, no matter how big or small they may be individually. In simple terms, it is a calculation that one can execute and that can be useful as part of the decision in whether or not one would like to make an investment in the company in question, and whether or not they think the idea is a financially wise one.

The earnings per share (EPS) therefore, refers to what proportion of  a company’s profit has been dedicated to each individual share of that company’s stock. People regard this measure very highly, most particularly those that are interested in and that invest in the stock market actively – investors and traders. It is generally accepted that if a company has a higher earnings per share value than another, then it also has a better level of profitability and is therefore usually the more desirable option for investment. When the earnings per share is being calculated, it is recommended that a weighted ratio is made use of, since the number of shares that an organisation has in different types and places can be a varying one over the course of time naturally. The ‘weighted average’ of a company refers to the number of outstanding shares, more specifically, how much the number of outstanding shares that a company has, has changed over time, and whether or not it has at all! It is considered to be an important calculation to make prior to working out the earnings per share, in order to obtain a more accurate reading of where the company could be in the future, and to ensure that the earnings per share value that is obtained is not just one that is based on recent successes and endeavours of the company.

With the weighted earnings per share in mind, there are two different ways that the earnings per share value of a company can be calculated. It can be calculated firstly as the normal earnings per share, which is done by establishing the net income of the organisation in question after tax and then dividing this number by the total number of the outstanding shares that a company has. Alternatively, it can be calculated and a more realistic result can be obtained by calculating the weighted earnings per share value, which is done by taking the total dividends away from the net income after tax, and then dividing this number by the total number of outstanding shares that the company in question has.

The earnings per share value can be a provider of valuable information to a potential investor, depending on what type of investment that said investor is looking for.

The earnings per share value can be a provider of valuable information to a potential investor, depending on what type of investment that said investor is looking for. For example, an investor may be in search of an investment that is slightly more risky but that could provide extremely high returns if there risk happened to be worth it. On the other hand, an investor may be looking for an investment that can provide them with a steady source of reliable income that keeps any risk-taking to an absolute minimum. The earnings per share ratio of a company can tell this investor how much room the company in question has in terms of room for expansion to take place, and how reliable an investment they are making, as well as how much potential the investment has to return their needs.

Different types of Earnings Per Share Measure

There are many types of earnings per share measures that exist, three of which get the most focus from investors and shareholders.

Trailing EPS – the ‘trailing EPS’ is the earnings per share that the company in question had throughout the course of the previous financial year. It is an accurate reading to think about since it is based on  actual factual financial happenings within the organisation being looked at – it is not merely guesswork that is based on predictions on the company and how they think their business year is going to end up. However, the main problem with this figure is that it does not refer to what is relevant at the current time – a company’s profits can be extremely different 10 months apart.

Current EPS -  the ‘current EPS,’ refers to the earnings and the numbers of the company at the present time. This figure can be based on differing data however, in that a certain amount of the data will be factual and will use recent factual information surrounding the organisation in question, whilst the remainder of the data will be made up of reasonable predictions. The accuracy of this number is very much reliant on what stage of the financial year the company is in when the readings are made.

Forward EPS – ‘forward EPS’ is a number that is based on the profits that the organisation believes they will be making at some point in the future. These estimations are made either by the company in question, or stock market analysts. Anyone that is seriously considering investing in a company should consider these values, since they can be a good indicator as to what the future holds for the company.

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The report looked at figures for 2018 and showed that 370,000 people applied for their first mortgage, an increase of 1.9% on the previous year and the highest number since 2006 when there were 402,800 applications.

New lending

The report also showed that there was some £62 billion in new lending during 2018, an increase of almost 5% on the same period the previous year.  Schemes such as the Help to Buy scheme from the government means that more people than ever are in a position to buy their first home, without always having to have a massive deposit.

New buy to let mortgages stood at 5,100 but this has actually fallen on previous years, by around 5%.  This shows that the market has become a little cautious in the light of new tax rules and other regulations being put in place for landlords.

First home success

With 370,000 new first-time buyer applications, this is the highest number in a 12 month period for 12 years, showing that while there are concerns about the housing market, there are still plenty of positive signs.  This works out as around 35,000 first time buyers a month that are moving into position to buy their first home.

The report also showed that the average age of the first time buyer was 30 and their gross household income was £42,000.

Getting that first mortgage

The increase in numbers is a positive sign but there are still considerations for first-time buyers, and this is why that average age is around 30.  For starters, you need to have a deposit of between 5-20% of the cost of the home before you attempt to get a mortgage.  So if you are looking at a property worth £150,000, you will need at least £7500 in a deposit.   The more deposit you have, the more mortgage products are open to you.

Deposit isn’t everything, you also need to factor in other costs.  Buying your first home still involves some costs that can be quite substantial and include:

• Solicitors fees
• Survey Costs
• Removal costs
• Building insurance
• Furnishing and decorating costs
• Mortgage arrangement and valuation fees

There’s no Stamp Duty to pay on your first property up to a value of £300,000, as long as it isn’t worth more than £500,000.

Monthly repayments

After the problems of the Financial Crisis, lenders are also a lot more cautious about ensuring you can afford your mortgage payments and still pay all of your other living costs before they commit to giving you the money.

It can be an idea to put together a budget before you start mortgage shopping that looks at your outgoings.  This can be things like food, utility bills, council tax, water rates and also any existing debt you might have.   You will need to provide proof of income and outgoings to show the mortgage company that these figures are accurate.

You may qualify for a home buyer scheme backed by the government and a mortgage broker will be able to tell you about that.  There are affordable housing schemes, shared ownership schemes and also the Help to Buy scheme that could all make the difference between getting that house or not.

Finding the right deal

There’s a lot involved with finding the right mortgage deal and that’s why many first time buyers now use a mortgage broker.  They aren’t tied to specific companies and can find a product that suits your circumstances and budget.  That way, more people can continue to become first-time property owners in 2019.

When considering where to take your company to, try to think differently to all of the other companies out there. Don’t jump for the easy route of heading straight to the US or an easy nearby market, for example from the UK to Ireland.

Home in on your options

Before you make a move, decide on your options. Does it make financial and logical sense to expand by city, country or by language?  If you’re looking to expand straight into another country over a city first, then take a private jet charter and talk to the locals. It’s imperative when expanding your business globally, to spend some time on the ground where you are wanting to set up base and speak to people who live and work there. You could look at all the data trends for your business sector in that country and analyse whether or not the market will suit your model, but nothing beats the invaluable insight of the people who reside there full time.

Prioritise the markets

There isn’t much point trying to jump into every single market that’s detailed in your statistics document. Think about what really matters to your business and what direction you’re heading in.

Is this new market as big as your home market or bigger? If the answer is no, then it’s meaningless expanding your business into this country, unless you have a strong reason. Are there similarities across markets? If you are a logistics or eCommerce business, the likelihood is that you’ll need established distribution hubs that cover most of Europe and beyond – make sure you check out factors like this before you make the move.

Can you get ahead of the local competition? When you head to your desired location and speak to the locals, get an idea of how established your competitors are. Are they start ups who you will have certain advantages over, or are they big conglomerates who may be hard to beat?

Leverage Partner and Channel Relationships

Working with your partners is a solid strategy when looking to expand globally. Maybe the distribution company you work with has its headquarters in your desired country or has a strong presence there. Keep your partners in the loop with your growth plans, you never know when you’ll need to lean on them for a greater insight and potential assistance as you drive your expansion forwards.

But have you ever thought about where these came from, or how each savings initiative has changed over the years? In the following infographic, personal pension specialist True Potential Investor has taken a step through time with this question in mind.

Did you know that the first known building society formed for groups of individuals who were looking to help each other to buy property? Or that the Bank of England was founded towards the end of the 17^th century to fund the war effort against France? How about that the Amsterdam Stock Exchange was believed to be the world’s first stock market?

Discover even more fascinating facts by browsing through the full infographic below…

Market Outlook

Mihir Kapadia, CEO and Founder of Sun Global Investments

When it comes to investment trends, every year appears to have a certain theme which dominates the markets and beyond throughout the course of those twelve months. 2017 was largely a stock market year, with global markets closing at record highs thanks to a booming global growth rate, loose tax and monetary policy, low volatility and ideal currency scenarios (for example, a weaker pound supporting inward investments). It was also a crazy year in the consumer segment with market momentum captivated with crypto assets, leading to established financial services firms to create special cryptocurrency desks to monitor and advise.  Today, things are looking very differently.

Markets have since moved from optimism (led by stock markets) to a cautious tone (with an eye out for safe haven assets). This is largely due to the concerns over slowing global growth rates (especially from powerhouse economies like Germany and China), volatile oil markets and Kratom Powder For Sale induces significant market threats with the likes of Brexit and the trade wars. The rising dollar has also not helped much, with Emerging Market and oil importing economies suffering with current account deficits.

At the World Economic Forum’s annual meeting in Davos last month, the International Monetary Fund (IMF) has warned of the slowdown, blaming the developed world for much of the downgrade and Germany and Italy in particular. While the IMF does not foresee a recession, the risk of a sharper decline in global growth is certainly on the rise.  However, this risk sentiment doesn’t factor in any of the global triggers – a no-deal Brexit leading to UK crashing out of the EU or a greater slowdown in China’s economic output.

While the IMF does not foresee a recession, the risk of a sharper decline in global growth is certainly on the rise.

Volatility expected

 We have lowered earnings expectations globally due to more subdued revenue and margin assumptions. We believe investors will be confronted by increased volatility amid slower global economic growth, trade tensions and changing Federal Reserve policy. Our base case relies on the view that the US may enter a recession in 2020. As the market dropped 9% in December, the worst market return in any 4th Quarter post World War II, many risks are starting to be discounted by the market. We have reduced industrials, basic materials and financials due to heightened risks.

There are a number of factors that are driving this view, but it is important to note that upsides to the risks do exist:

• The Fed: The Fed’s slow pace of hiking interest rates is meant to be just enough to keep wage inflation from accelerating, but not so much that it crushes business and consumer spending. It’s a difficult balancing act.
• Fiscal stimulus: The tightening of fiscal conditions has already created a slowdown that only time and lower rates will heal. The impact from the US Government’s lower tax rates and higher spend will end when 2019 does.
• Trade and China: The lack of clarity on trade has created an ‘uncertainty tax’, forcing companies to seek alternative means of procurement, adding to inefficiencies and holding back some investment decisions. China is trying to stimulate its consumer sector, but the country is already weighed down by high debt and defaults, and it has limited ability to create demand at present.
• European politics: Brexit negotiations and Italy’s budget situation have added to the political fog affecting investor confidence.

In uncertain markets like these, we should look to do three things: reduce risk, focus on high quality and stay alert for opportunities due to dislocations.

So what do you do?

We have dialled down risk in 2018 and will likely continue to do so in 2019 as we expect global growth to slow. However, the expected volatility could cause dislocations that are not fundamentally driven, resulting in tactical opportunities to consider.

The best piece of advice to be relayed is: “Don’t run for the hills”. In uncertain markets like these, we should look to do three things: reduce risk, focus on high quality and stay alert for opportunities due to dislocations.

It would be ideal to shift allocations from cyclical to secular exposures, especially away from industrials, basic materials, semiconductors and financials due to heightened risks. It would also be ideal to focus on high-quality companies with secular growth opportunities that can generate dividends as well as capital appreciation.

Two sectors stand out as both strategically and tactically attractive - aging demographics and rapidly improving technology are paving the way for robust growth potential in healthcare. Accelerating growth in data, and the need to transmit, protect, and analyse it ever more quickly, make certain areas in technology an attractive secular opportunity as well. Where possible, our advice to investors is to maintain a tactical portion of their risk assets, because volatility may give them the opportunity to find mispriced sectors, themes and individual securities.

Still, in this climate, the bottom line is that you should be increasingly mindful of risk in your portfolio so that you can reach your long-term investment goals. 

Eastern Economies vs. Western Economies: Countries, Sectors and Projects to Watch

Dr. Johnny Hon, Founder & Chairman, The Global Group

The global economic narrative in 2018 was characterised by growing tensions between the US and China, the world’s two largest economies. The US imposed 10% to 25% tariffs on Chinese goods, equivalent to more than $250bn, and China responded in kind.

This had a seismic effect on global economic growth which, according to the IMF, is expected to fall to 3.5% this year. It represents a decline from both the 3.7% rate in 2018 and the initial 3.7% rate forecast for 2019 back in October.

Although relationships between Eastern and Western economies are currently strained, suggestions that a global recession is on the horizon are exaggerated. China’s economy still experienced high growth in 2018.

However, it is clear that trade wars have no winners. The rise of protectionism in the West is creating more insular economies and we are at a time when increased efforts are needed for mutual understanding. There are still enormous opportunities across the globe: India is among several global economies showing sustained high growth, and innovations in emerging markets such as clean energy or payments systems continue to gather pace. Investors who are savvy and businesses with true entrepreneurial flare can triumph at a time when others may be stagnating.

The rise of protectionism in the West is creating more insular economies and we are at a time when increased efforts are needed for mutual understanding.

Here are the exciting countries, sectors and projects to look out for in 2019:

Countries

Recent trends in foreign direct investment (FDI) reveal a growing trend to support developing economies. In the first half of 2018, the share of global FDI to developing countries increased to a record 66%. In fact, half of the top 10 economies to receive FDI were developing countries.

This trend will accelerate in 2019 - the slow economic global growth, and subsequent currency depreciation means the potential yield on emerging market bonds is set to rise dramatically this year. More and more investors are realising the great potential of these developing economies, where the risk versus reward now looks much more attractive than it did in recent years. Asia in particular has benefited from a 2% rise in global FDI, making it the largest recipient region of FDI in the world.

India and China are both huge markets with a combined population of over 2.7 billion, and both feature in the world’s top 20 fastest growing economies. However, the sheer quantity of people doesn’t necessarily mean the countries are an easy target for investment. There are plenty of opportunities in both India and China, but it takes a shrewd investor with a good local business partner to beat the competition and find the right venture.

Other Asian economies to invest in can be found in Southeast Asia, including Vietnam, Singapore, Indonesia and Cambodia. In a recent survey by PwC, CEOs surveyed across the Asia-Pacific region and Greater China named Vietnam as the country most likely to produce the best investment returns – above China.

Investors who are savvy and businesses with true entrepreneurial flare can triumph at a time when others may be stagnating.

Sectors

One sector in particular which remained resilient to the trade wars throughout 2018 was technology. By mid-July, flows into tech funds had already exceeded $20bn, dwarfing the previous record amount of $18.3bn raised in 2017. This was a result of the increased accessibility and popularity of technologies in business.

In the area of Artificial Intelligence (AI) for example, a Deloitte survey of US executives found that 58% had implemented six or more strains of the technology—up from 32% in 2017. This trend is likely to continue in 2019, as more businesses realise AI’s potential to reduce costs, increase business agility and support innovation.

Another sector which saw significant investment last year was pharmaceuticals and BioTech. By October, these had already reached a record high of $14 billion of VC investment in the US alone. One particular area to watch carefully, is the rising demand for products containing Cannabidiol (CBD), a natural chemical component of cannabis and hemp. Considering CBD didn't exist as a product category five years ago, its growth is remarkable. The market is expected to reach $1.91 billion by 2022 as its uses extend across a wide variety of products including oils, lotions, soaps, and beauty goods.

Projects

At a time of rising trade tensions and increased uncertainty, cross-border initiatives are helping to restore and maintain partnerships and reassure global economies. China's Belt and Road Initiative is a great example of how international communities can be brought closer together. From Southeast Asia to Eastern Europe and Africa, the multi-billion dollar network of overland corridors and maritime shipping lanes will include 71 countries once completed, accounting for half the world’s population and a quarter of the world's GDP. It is widely considered to be one of the greatest investment opportunities in decades.

The Polar Silk Road is another international trade initiative currently being explored. The Arctic offers the possibility of a strategic commercial route between Northeast Asia and Northern Europe. This would allow a vast amount of goods to flow between East and West more speedily and more efficiently than ever before. This new route would increase trading options and would make considerable improvements on journey times – cutting 12 days off traditional routes via the Indian Ocean and Suez Canal. It could also save 300 tonnes of fuel, reducing retail costs for both continents.

Since founding The Global Group - a venture capital, angel investment and strategic consultancy firm - over two decades ago, I have seen the global economic landscape change immeasurably. The company is built around the motto ‘bridging the frontiers’, and now more than ever, I believe in the importance of strong cross-border relationships. Rather than continuing to promote notions of protectionism, we must instead explore new ways of achieving mutual benefit and foster a spirit of collaboration.

Brexit, Trade Wars and the Global Economy

Robert Vaudry, Chief Investment Officer at Wesleyan

If there’s one thing that financial markets do not like, it is uncertainty - which is something that we’ve faced in abundance over the last couple of years.

The UK’s decision to leave the European Union and President Trump’s 2016 election in the US, sent shockwaves through markets, and the two years that followed saw increased volatility across asset classes. This year looks set to be fairly unpredictable too, but in my view there are likely to be three main stabilising factors. Firstly, I expect that the UK will secure some form of a Brexit deal with the EU – whatever that may look like – which will give a confidence boost to investors looking to the UK. Secondly, the trade war between America and China should also come to an end with a mutually acceptable agreement that further removes widespread market uncertainty. Thirdly, the ambiguity surrounding the US interest rate policy will abate.

The Brexit bounce

A big question mark remains over whether or not the UK is able to agree a deal with the EU ahead of the 29th March exit deadline. However, with most MPs advocating some sort of deal, it’s highly unlikely that the UK will leave without a formal agreement in place. So, what does this mean? Well, at the moment, it looks more likely than ever that the 29^th March deadline will need to be extended, unless some quick cross-party progress is made in Parliament on amendments to Theresa May’s proposed deal. While an extension would require the agreement of all EU member states, this isn’t impossible, especially given that a deal is in the EU’s best interests as the country’s closest trading partner.

The ambiguity surrounding the US interest rate policy will abate.

The result of any form of deal will be a widespread relief that should be immediately visible in the global markets. It will bring greater certainty to investors, even if the specific details of a future trading relationship between the UK and EU still need to be resolved. Recently, it was estimated that Brexit uncertainty has so far resulted in up to $1trn of assets being shifted out of the UK, and I personally don’t see this as an exaggeration. Financial markets have been cautiously factoring Brexit in since the referendum vote in 2016 and, if we can begin to see a light at the end of the Brexit tunnel, it is likely that some of these vast outflows will be reinvested back into the UK. We can also expect to see a rise in confidence among UK-based businesses and consumers, at a time when the unemployment rate in the UK is the lowest it has been since the mid-1970s.

All of these outcomes would help lead to a more buoyant UK economy and the likelihood that UK equities could outperform other equities – and asset classes – in 2019.

Trade wars – a deal on the table?

Looking further afield, the trade tensions that were increasingly evident between the US and China last year could also be defused. The last time that China agreed to a trade deal, it was in a very different economic position – very much an emerging economy, with the developed world readily importing vast quantities of textiles, electronic and manufacturing goods. However, given China’s current position as one of the world’s largest economies, it has drawn criticism from many quarters regarding unfair restrictions placed on foreign companies and alleged transfers of intellectual property.

Either way, global financial markets are eager for Washington and Beijing to reach a mutually agreeable trade deal to help stimulate the growth rates of the world’s two largest economies.

It was estimated that Brexit uncertainty has so far resulted in up to $1trn of assets being shifted out of the UK.

Be kind to the FED

2018 saw an unprecedented spat between the US President and his Head of the Federal Reserve. What began as verbal rhetoric quickly escalated into a full-frontal assault on Jerome Powell, and the markets were unimpressed. With the added uncertainty about the impact of a Democrat-led US House of Representatives, we headed into a perfect storm, and equity markets in particular rolled over in December. Ironically, this reaction, coupled with a data showing that both the US and the global economy are generally slowing down – albeit from a relatively high level – has resulted in a downward revision of any US interest rate rises in 2019. The possibility of up to four US interest rate rises of 25bps each during 2019 is now unlikely – I expect that there will only be one or two rises of the same level.

 Transitioning away from uncertainty

So, in summary, 2019 is set to be another big year for investors.

The recent protracted period of uncertainty has hit the markets hard, but we’ll have a clearer idea of what lies ahead in the coming months, particularly regarding Brexit and hopefully on the US and China’s trade relations too. If so, this greater certainty should pay dividends for investors in the years to come. UK equities are expected to strongly bounce back in 2019, which is a view that goes against the current consensus call.

It has equally attracted the attention of retail investors and potential bad actors. Combine the elements of hype tactics, fanciful notions of a new paradigm, and greed, we have the perfect market factors which could induce a frenzy unlike we’ve seen since the beenie babies craze. Oh wait, this sounds awfully similar to 2017, does it not? Below Jamar Johnson, crypto expert and owner of Otravel.ai, explains the potential regulation trends we may be looking at when it comes to cryptocurrencies.

Sure, many are now jumping on the blockchain bandwagon, and it is up to responsible regulators to guide the market and its participants responsibly for the next wave of blockchain mania, if and when it arrives. However, we must take on a more nuanced approach to said proposed regulation: how does a regulator support true innovation while not stifling its stated goals through high-cost barriers to entry as some might argue has taken place in New York with the BitLicense? How does countries like the United States incorporate policy frameworks that are similar to Singapore and Malta which are emerging as a hotbed for attracting blockchain talent? The issue becomes even trickier, when one factors in the opportunities for wealth creation (estimated to be in the trillions) despite the US currently lacks a comprehensive framework towards the blockchain across all 50 states.

Self-regulation organisations are commonplace in other sectors - for example, the Regulatory Authority in the Financial sector (FINRA) plays a major role in the Regulatory organisation of the broker and exchange.

The current EU laws do not provide protection to any investor who can be exposed to the risks of digital asset markets, taking into account the significant prices and the lack of supervision of offers and exchanges.

While many nations have discussed their policy towards the blockchain and cryptocurrencies, some of the smallest countries and regions have quickly moved into the creation of novel laws and programs designed to attract top talent within the blockchain space--like Malta, Singapore, and Puerto Rico being the closest US example, to date.

New and evolving financial technology companies need to comply with a network of laws and regulations that are designed to help customers and finance their finances and reduce the costs of repairing terrorists.

Across the pond, the Financial Authority of the United Kingdom provides fintech companies with a single domestic finance Regulatory Authority, clear qualification and test parameters, the possibility of waivers (on permission and review) and direct cooperation with Regulatory Authority.

The initial coin offer (ICOs) have become a popular way for businesses to earn money by launching a new digital coin in exchange for crypto currencies such as bitcoins or air. In countries like the US, it will be prudent for ICO founders to have clear guidance from a professional lawyer or legal team to help navigate the complex body of legals and regulations surrounding the offering of securities and meeting the Howey Test.

Last year, the Financial Authority (FCA), the UK's Financial watchdog, issued a statement detailing the risk of investment in ICOs.

In February, the U. s. Treasury Committee, which consists of several politicians, launched a request for digital currencies and a dispersed technology or a blockchain.

Part of the act requires digital exchange and portfolio to apply customer-specific care checks such as banks.

The regulatory environment within the US concerning digital currencies are not clear just yet. But we know they are coming and on its way to being formed (look into places just as Puerto Rico, Wyoming, or New York as an example). But regulations are coming. New announcements and stances are being made on a recurrent basis. The benefits for proper regulatory structure in the US is not there just yet, but the opportunity is too great to ignore: new tax base, the ushering in of the next waves of America’s greatest entrepreneurs, and the shape the narrative for the blockchain revolution currently underway.

According to the Independent, many companies are struggling to decide on importing and exporting in light of confusion over the direction Brexit will take businesses.

But what is the current state of the nation’s trading with the wider world? In this article British brand Gola, that is renowned for its classic trainers, take an in-depth look at the UK’s imports and exports, from the items we sell the most of to what we’re buying in, as well as which countries are our top import and export locations.

Terminology rundown

With so much talk in the tabloids and newsrooms about trade and Brexit, you might be wondering what some or all of the terminology springing up means.

Before we delve further into what the UK has to offer in terms of trade, let’s break down some of the terminology:

• Import and export — an easy one to start with, imports are items and goods we buy into the country. Exports are items and goods we sell to other countries.
• Trade deficit and trade surplus — these two terms come under the umbrella of the balance of trade. It is essentially the difference between monetary value of a country’s exports and imports. If a country is importing more goods than it is exporting, then the country has a trade deficit. A trade surplus occurs if a country is exporting more than it is importing. Generally, a trade deficit is considered concerning as it is seen as the country being unable to produce enough goods to supply its people, requiring them to import more.
• “Special relationship” — The oft-cited “special relationship” with the US boils down to our trade relationship. In 2016, the UK exported £100 billion worth of goods and services to the US, running a trade surplus with the US of £34 billion.
• Single market — The European Single Market is a single market that guarantees the free movement of goods, services, capital, and labour within the EU.
• Customs Union — A customs union is where a group of states or countries agree to charge the same import duties to each other.

It is important to note that, regarding the “special relationship” with the US, the UK does export more to the US than any other country. However, when considering the EU as a whole with the same trade laws etc, rather than 27 separate countries, the EU imports more from the UK than the US by far.

What are we exporting?

According to the Observatory of Economic Complexity (OEC), in 2016 the UK’s top export item was cars, which accounted for 12% of the overall $374 billion export value that year. One of example of this is the world renowned Mercedes-Benz, which offer a variety of cars, including the Mercedes Gle.

Other popular UK products were gas turbines (3.5%), packaged medicaments (5.2%), gold (4.0%), crude petroleum (3.4%), and hard liquor (2.1%).

We also export a fair amount of food and drink, with items such as whisky and salmon popular abroad.

The BBC also points out that exports and imports are not just physical goods. In this digital age, it’s easier than ever to offer services as exports too, and the UK does just that, via financial services, IT services, tourism, and more.

Where are we exporting to?

In 2016, our top export destinations were:

1. United States (14%)
2. Germany (9.5%)
3. The Netherlands (6.0%)
4. France (6.0%)
5. Switzerland (5.1%)

China, one of the countries the UK is eyeing up for a potential trade deal after Brexit, accounted for 5%. Again, it is worth considering that Europe as a whole accounted for 55% of our top export destinations.

What are we importing?

We are importing rather similar items as we’re exporting. Top imports into the UK in 2016 included gold (8.2%), packaged medicaments (3.1%), cars (7.8%) and vehicle parts (2.5%).

Where are we importing from?

For 2016, the top origins of the UK’s imported products were:

1. Germany (14%)
2. China (9.8%)
3. United States (7.5%)
4. The Netherlands (7.3%)
5. France (5.8%)

The UK’s trade deficit

Despite our popular products, the nation is sitting with a trade deficit to the EU — we import more from the EU than we sell to the EU. In 2017, we exported £274 billion worth to the EU, and imported £341 billion’s worth from the EU. In fact, the only countries in the EU that bought more from us than we bought from them were Ireland, Sweden, Denmark, and Malta. Our biggest trade deficit is to Germany, who sold us £26 billion more than we sold to them.

The UK also has a trade deficit with Asia, having sold £20 billion less in goods and services than we bought in.

As previously mentioned, we have a trade surplus with the United States, as well as with Africa.

A trade deficit is generally viewed in a poor light, as it is basically another form of debt: the UK imported $88.4 billion from Germany in 2016. Germany imported $35.5 billion from the UK, making a difference of $52.9 billion owed by the UK to Germany.

With uncertainty abound about the impact of Brexit on imports and exports, it remains to be seen how UK businesses will continue to trade abroad, and if focuses will shift.

Sources:

https://atlas.media.mit.edu/en/profile/country/gbr/

https://www.ons.gov.uk/businessindustryandtrade/internationaltrade/articles/whodoestheuktradewith/2017-02-21

https://www.bbc.co.uk/news/business-41413558

https://www.independent.co.uk/news/business/news/brexit-uk-imports-exports-uncertainty-british-import-export-business-a8589796.html

https://www.investopedia.com/articles/investing/051515/pros-cons-trade-deficit.asp

https://fullfact.org/europe/what-trade-deficit-and-do-we-have-one-eu/

https://www.dw.com/en/is-germanys-big-export-surplus-a-problem/a-18365722

In Africa, the want for cryptocurrency is growing, and according to Iggi Vargas at Paxful, this could affect the wider markets.

The interest in bitcoin has continued to grow at a rapid pace. Exchanges are reporting that a lot of Africans, especially millennials, are taking over the platforms.

The “Cheetah generation”

The term “Cheetah generation” was coined by Ghanaian economist and author George Ayittey. It refers to the young and hungry generation of African graduates and professionals. This is the generation that is trying to change the status quo for the better.

“The Cheetahs do not look for excuses for government failure by wailing over the legacies of the slave trade, Western colonialism, imperialism, the World Bank or an unjust international economic system… To the Cheetahs, this ‘colonialism-imperialism” paradigm, in which every African problem is analyzed, is obsolete and kaput. Unencumbered by the old shibboleths, Cheetahs can analyze issues with remarkable clarity and objectivity.” (Ayittey, 2010)

The Cheetahs offer the people of Africa a new way of thinking. Ayittey says that their outlooks and perspectives are “refreshingly different” from past African leaders, intellectuals, and/or elites.

Ayittey compares them to what he calls the “Hippo generation”. This refers to the generation before the Cheetahs.

“ [The Hippo generation] lacks vision - hippos are near-sighted - and sit tight in their air-conditioned government offices, comfortable in their belief that the state can solve all of Africa’s problems.” (Ayittey, 2010)

According to Ayittey, the Hippos are the ones that “are lazily stuck complaining about colonialism, yet not doing anything to change the status quo.”

With that being said, how does the Cheetah generation translate to the Africans’ new-found passion for crypto?

Hunger for crypto

When it comes to cryptocurrency, Africa is a shining star. This is because of one major factor: peer-to-peer finance. Africans have joined the peer-to-peer revolution. It is doing wonders not only for their economy but also their culture. The Cheetahs seem to be embracing this as a good number of African millennials have been joining peer-to-peer marketplaces. This is important for many reasons.

First, it shows that peer-to-peer platforms have an amazing reach. Africa does not have, by any means, cutting-edge technology but they find a way to make a living off of cryptocurrency. Being able to send money around the world without the bank’s high fees are a big deal. Whether it be to a sibling halfway around the world or to your neighbor, being able to send money anywhere is an advantage for Africans.

Second, it shows that peer-to-peer platforms are easy to use. Many non-users will find bitcoin intimidating at first and give up on learning. This shows not only that everyone can use peer-to-peer platforms, but also that it's easy to learn if you’re willing.

Third, it shows that the underbanked aren’t a lost cause. With Africa being so underbanked, bitcoin serves multiple purposes for them. It serves as both a way to hold your money and a way to send out money.

Fourth, it shows that everyone has the power to take control of their own finances. Some Africans actually make a living by trading cryptocurrency, and you can too.

Lastly, it shows that a revolution is in the works; a peer-to-peer revolution. The benefits of peer-to-peer exchanges are being seen all over Africa. The idea of fast transactions and innovation flawlessly aligns with the Cheetah Generation. Clearly cryptocurrency and peer-to-peer finance are the right tools for the new generation of Africans to get ahead and prosper. But it doesn’t just have to be Africa. All over the world, peer-to-peer platforms are showing significant amounts of growth. They are also becoming a popular method to buy bitcoin.

The time is now

It seems like we can learn a lot from the Cheetah generation, including how to make money with bitcoin. If they can have the right set of mind, the world can follow suit. The drive of these young prodigies is something to look up to. They have the attitude that can conquer and inspire the world. Taking control over your own finances is a big deal, and it seems the Cheetahs have figured it out. The peer-to-peer revolution is here and it’s time to get in on it.

Investment portfolios are equivalent to financial badges of honor that investors wear with pride! Any investors should have a diverse and dynamic portfolio not only to show that you can handle almost every type of investments as an investor but to have a pretty wide net of investments that have different rates of profits and loss. In fact, since diversity is what you’re aiming for your investment portfolio, why not add bitcoins in the mix?

Understandably, the reception of bitcoins can be a hit or miss when it comes to public opinion—and in terms of investments, diversity can be a good goal for every investor to achieve. In this case, why should bitcoins be included in an investment portfolio for the sake of diversity?

Experts Trust Bitcoin

Bitcoin is one of the world’s most popular forms of cryptocurrencies. The currency, also known as ‘cryptocurrency’, has been a subject of trust and distrust among modern financial experts, including well-known economists from Yale, Aleh Tsyvinski and Yukun Liu. Their research shows that for those investing in bitcoins for their portfolios, it should have a holding of at least 6% for optimal construction on your portfolio.

Other bitcoin experts such as Wences Casares, Chamath Palihapitiya, and John McAfee also offered their own brands of expertise on the cryptocurrency, with all three of them, among others, predicting the rising value of bitcoin in the coming years. With that in mind, the trust that numerous experts have can be essential for your consideration in including bitcoins in your investment portfolio.

Bitcoin is a Viable Option for Investments

Countries like the Philippines, US, Venezuela, Turkey, Italy, India, South Africa, Nigeria, and Argentina are currently some of the many countries that have been undergoing major economic issues, with Venezuela being a massive casualty with an inflation rate of over 25,000%. Because of the various issues that are plaguing these countries, many of them are now looking at bitcoin as a reliable alternative for people to use for future transactions since their national money has virtually no value.

This is something to consider if you’re planning to invest in different companies from different countries, or rather if you’ve already invested in international companies. While it can be a good opportunity for investors to add to their portfolio nonetheless, one can never be too sure about the economic structure of such.

Bitcoins Have a Steady Rise in the Market

One thing that’s good about bitcoins is its steady rise in the market. As of September 2018, Bitcoin has been up 2.82% in a 24-hour period, marking its slow, yet steady rise in the cryptocurrency market.

This is a great thing to consider when you’re looking for diversitySet featured image in your investment portfolio as not only can this ensure (though not always) greater chances for profit for investors, this can also make a great addition to your investment portfolio as a whole.

Investing in Bitcoin is a Challenge

All in all, investing in Bitcoin can be a challenge to many investors. Every investor taking the leap must always be up-to-date with current affairs, trends, and news that can affect the crypto world, not to mention having to study up on cryptocurrency as a whole.

Key Takeaway

When it comes to diversity of an investment portfolio, there are a lot of other things to consider. With these three factors in mind, getting to buy bitcoins, as well as buying tether and other forms of cryptocurrencies, for your investment portfolio can be a great opportunity nonetheless as you, as an investor, can get the chance to relish in the benefits that the cryptocurrency can provide, whether it be for diversification for your portfolio, other forms of investments, or for maximum profit on your end!

Ethereum, currently the second largest cryptocurrency after Bitcoin, will experience a “monumental, defining global breakout” when smart contracts can accept outside data.

The bullish prediction from influential technology expert, Ian McLeod of Thomas Crown Art, the world’s leading art-tech agency, comes as Ethereum’s price jumped 4% on Monday, adding some 8% over the last week, to trade at highs of $210.

Mr McLeod comments: “Ethereum is back in bull territory and is on track to enjoy considerable gains before year-end.

“I maintain that we can expect Ethereum to hit $500 by the end of 2018 and go on an overall upward trajectory throughout 2019.

“However, what will be the monumental, defining driver for its global breakout? Oracles.

“Oracles link Ethereum-run smart contracts to the real world and will be responsible for the digital currency to enter an entirely new phase of mass adoption.”

Oracles are trusted data feeds that deliver information into the smart contract, thereby taking away the requirement for smart contracts to directly access information outside their network. Typically, oracles are usually supplied by third parties which are authorised by the organisations that use them.

Ian McLeod continues: “Oracles are a massive step forward in the practical utilisation of smart contracts. They allow smart contracts to accept outside data to decide upon an action – and this has a myriad of highly-demanded, real-world use-cases in almost every sector.

“For instance, they can help insurance companies with pay-outs on flight delays, sports betting firms with result information coming from various trusted sources, and can help us in the art world by conclusively proving the provenance of artwork quickly and easily.”

He adds: “Using a blockchain to authenticate artwork is an ideal use-case for smart contracts. They provide the ability to store a permanent, immutable record of artwork at the point of creation which can be used to authenticate registered works. Oracles will further enhance this concept and lighten smart contracts’ work processes.”

 The tech expert concludes: “When Ethereum-based smart contracts are fed a robust and reliable information through oracles to make precise and correct judgements, Ethereum’s price will explode.”

Last month, Mr Mcleod noted: “We can expect Bitcoin to lose 50% of its cryptocurrency market share to Ethereum, its nearest rival, within five years.

“Ethereum is already light years ahead of Bitcoin in everything but price – and this gap will become increasingly apparent as more and more investors jump into crypto.”

(Source: Thomas Crown Art)