Highlights of the week in finance, investment, emerging-markets, risk, and crypto markets from Lima Charlie Business Intel. This week’s report covers Russia, China, Poland, Sweden, the Baltic States, the Arctic Region, Kuwait, Morocco, Bahrain, Saudi Arabia, Japan, Taiwan, Guatemala, Ecuador, Mexico, South America, El Salvador, and the United States.
Cryptocurrency: New Investor Platforms and Impact
UBank Releases Peer-To-Peer Global CryptoMarket To Simplify Crypto Space for First-Time Investors
On Friday, UBank, a pioneering payment app system in Eastern Europe, announced it would be launching a global marketplace for investors and users to exchange cryptocurrency for real goods, and vice versa.
According to the platform’s website, UbcoinMarket enters the space at a time when “Mass consumers are surrounded by stories of other people making a killing from investments in Bitcoin and many other coins. They know they will never mine for cryptocoins, nor have they any desire to buy it on a digital exchange.”
The platform appears to bridge the gap between the oft-complicated world of crypto and the real world itself. First time investors will be able to gain footing in the space while experienced ones will have the opportunity to spend crypto wealth without converting it to fiat currencies.
According to the CEO of the group, the process roughly works as follows: “You put up your goods — a laptop, a car, an item of clothing, whatever — for sale, sell it, receive tokens, and then hold them as investment or means of payment or change it to any major cryptocurrency like Bitcoin or Ethereum. And that’s it, now you are a crypto investor.”
As can be seen below, the intersection between the burgeoning crypto market, online shopping replacing brick-and-mortar alternatives, and the preference for smartphone marketplaces sets the scene to herald in this new technology (Image: Decentral Market).
Free Crypto Trading App Launched to Compete With Coinbase
This week, after clearing regulatory obstacles, Circle Internet Financial Inc. announced a digital investment crypto app, Circle Invest—hailing the service as an app that’s “actually built around investing, not trends.”
Commission-free trading is provided in-app by the service which just weeks ago announced it had acquired cryptocurrency exchange Poloniex, which it hopes to build into a future crypto supermarket offering a wide array of various tokens.
Circle trades upwards of $2 Billion dollars in crypto a month and the service will provide users the opportunity to trade or invest in Bitcoin, Etherium, and Litecon among other tokens. The app provides the capability to even connect the user’s bank account to expedite instant deposits, while simultaneously providing market data.
One of the First-Ever Crypto Investment Algorithms Launches Test Run
Flipside Crypto, a cryptocurrency investment platform, secured a $3.4 million dollar equity financing round this week, providing the company the necessary capital to launch Flipside Crypto Eight in the coming weeks.
Flipside CEO Dave Balter noted, “at our heart, we are a data company…there are three steps to complete in order to own cryptocurrencies…[finding a place to buy your liquid currency, storing it in a digital wallet, and a safe place to put that wallet.”
The differentiating factor for the platform is in its algorithm that provides a fourth step of security, incorporating insight into the long-term value of various cryptocurrencies.
According to a recent Wired article, algorithms are taking control of Wall Street, weaponizing data in order to provide investors with an edge over their money. It was only a matter of time before the same algorithm trend hit the cryptomarket.
Cybercrime shifts focus from information theft to manipulating public attitudes
Cyber activity at the hands of nation states is increasingly transferring its hold from weaponizing information to manipulating fundamental infrastructure and voter psychology.
Attacks on national infrastructure and institutions like elections are, in particular, among the top priorities for nation-backed hackers, as supported by the EU Threat Risk below, comprised by a UBM Tech survey.
Nation-state attacks are on the rise and, according to Recorded Future, a cyber threat intelligence provider, a clear relationship emerges temporally between Russian-state-based hackers’ activity, national political interests, and attempts to cover digital tracks by using fake aliases for cyber crime, as shown in the three images below.
APT28 and APT29 were cyber espionage groups associated with Russian military intelligence agencies and the Russian Federal Security Service. The images (credit: Recorded Future) provide strong support for the rise of information weaponizing targeted toward influencing public attitudes and confidence in national institutions.
Emerging Sunrise Industry Spotlight: Drone-Hacker-Security
According to CSIRO’s data group, Data61, protecting drones and other cyber-physical structures from cybercrime is set to top the list of growth sectors in the Asia-Pacific region in the future.
Alongside this burgeoning industry are the fields of digital infrastructure, artificial intelligence and robotics, and energy storage.
According to the report, the use of drones is increasing globally with worldwide revenue from their production for commercial and personal use growing by 35.5% in 2016. Piloting of drones, however, is highly vulnerable to outside interference and the Asia Pacific region has seen a 40% increase in the number of daily cyber-attacks.
As can be seen below in the Sunrise Industries Report, projected ASEAN Cybersecurity spending is expected to increase exponentially over the next 5-10 years.
China Launches Arctic Ship for Polar Silk Road as Europe’s Center of Gravity Shifts Toward Poland-Sweden Alliance’s Baltic Ring Corridor
Geopolitically, investor prospects are burgeoning as international connectivity and partnerships are starting up in new regions in Europe.
This week, China launched its very first polar expedition cruise ship, a 104.4-meter vessel prepared to navigate through ice.
Through its push for the Silk Road Beltway Initiative, China has sought access to Europe, even expressing interest in a Polar Silk Road, voicing its plans in its first-ever “New-Arctic State” white paper.
In an effort to join China and Europe via the Arctic Ocean, experts see the move as an effort to link key trade flow through the conduit of the Arctic Ocean.
Investors look to key financial ventures made by the country in moving toward this goal, namely constructing an embassy in Iceland, investing in Greenland, and partnering with Russian integrated energy company Rosneft.
At the same time, this week saw the formation of a shift in the power center of Europe, moving from Germany to Poland and Sweden, two countries which created a strategic partnership to lend to the construction of the Baltic Ring corridor.
China’s vision, as provided by the Center for Strategic and International Studies, consists of pipelines, land corridors, and maritime corridors, a triad of geopolitical strategic wealth and power, as detailed below.
As can be seen, China and Russia are working together to move the global balance of power toward a more multipolar world, one that is conducive to their own tactical interests.
MENA Renewable Pipeline Spotlight: Kuwait, Morocco, & Bahrain
Recent developments with the TANAP and TAPI pipelines come as the MENA (Middle East North Africa) pipeline of solar power projects is projected to double in gigawatts this year.
According to the MESIA Solar Outlook Report, the following solar trends in the MENA region are expected to take place:
The country is projected to issue tenders for the 1.2 billion dollar Dibdibah solar facility which is touted to have an estimated capacity of 1 GW. The project will be completed by 2020. Kuwait will generate nearly 2 GW of renewable energy capacity by 2030.
The share of renewables in the energy mix, in a country heavily reliant on imported fossil fuels, is expected to increase to 42% by 2020 and 52% by 2030. The Noor II 200 MW CSP Power plant and Noor III 150 MW CSP plants are in the process of construction.
Bahrain projects 255 MW of PV capacity online by 2025 and 700 by 2030. The country will tender a 100 MW solar-power plant in the first quarter of 2018 and its first solar-panel manufacturing and production facility was inaugurated just last year.
The region is also continuing on its recent rooftop solar plan and had about 20MW connected as of the beginning of 2018. One such example of this endeavor is in Elcome’s headquarters at Dubai Investments Park, as seen below.
For a more global perspective on gains made in renewable energy investment, see this International Renewable Energy Agency’s data for the last decade.
Saudi Arabia Inks Deal with Japanese Investment Leader in New York For World’s Largest Solar Power Generation Project
Shortly before midnight at the Plaza Hotel in New York, Saudi Arabia’s Crown Prince Mohammed bin Salman and Softbank chief executive Masayoshi Son agreed on the terms of a deal to construct a conglomerate of solar parks across Saudi Arabia, generating around 200 gigawatts.
To put this figure into perspective, the GW total could power upwards of 100 million houses.
Salman inked the deal as he continues on his US tour to attract foreign investment and make the move toward becoming a private sector-driven kingdom. State-owned entities such as Saudi Aramco are expected to be privatized as well, projected to be the world’s largest initial public offering upon listing.
The project’s first portion of rollout will cost about 5 billion dollars.
Poland Secures Largest Weapons Procurement Deal in Its History as Country Is Set to Become First Eastern European Developed-Market
On Wednesday, Poland and the US coalesced on a deal to transfer $4.75 billion dollars worth of weapons to Poland through the purchase of Patriot missile defense systems.
The Polish president Andrzej Duda touted the deal as a “historic moment that ushers Poland into a new world of ultra-modern technology and weaponry.”
Geopolitically, the move comes in an effort to bolster Poland’s defenses against the encroaching Russian sphere of influence, especially in response to Moscow’s illegal annexation of Crimea in 2014.
Almost 60% of the country’s weaponry dates back to the Cold War Era, and Russia, predictably so, did not respond in kind to the move. A spokesperson for the Foreign Ministry called it a US plan to surround Russia with missile defense systems “under the pretext of mythical threats to security and safety.”
From an investment perspective, Poland is set to make the official switch from emerging market to developed market by September of 2018. The country will, thus, take its place with more than 20 other nations like Australia, France, and Germany and is historically the first Eastern European economy to be upgraded to Developed Market status.
To glean a sense of the emerging market scene during the early portion of last year, the following graphic displays a comparison between various European, Asian, South American, and MENA markets (source: Helping Advisors).
Ocean Carrier APL Links Economies of Asia and Latin America via Maritime Service
American President Lines announced this week the official launch of the Quetzal Express service (QEX) which will directly link the critical markets in China, Mexico, and the West Coast of South America.
Touting the fastest transit time of 22 days from South China to Mexico, APL’s QEX is the only such opportunity to directly connect Taiwan, Central and South China to Puerto Quetzal, Guatemala, and Guayaquil, Ecuador.
The service is set to begin on April 6, linking the important economies of Asia and Latin America in direct connection.
Connecting the geopolitical dots, trade between South America and Europe has reached a three-year high. Total export volume from Northern Europe and the Mediterranean to east coast South America reached the level of 850,000 TEU.
Sources of key growth that comprised this high can be seen below (image: JOC.com).
Advantages of the trade route as well as transit times boast a direct link from Ecuador to Asia, as seen below (image: APL)
US, Mexico Interests Align on High Seas: Drug War Prompts Maritime Agreement
The Mexican, US, and Colombian governments have reached an agreement to target drug smugglers on nautical turf, according to the Associated Press.
The move heralds an increased flow of intelligence and cooperation between the two countries whose tensions have run particularly high in recent times.
The new maritime front marks an open-ended agreement as the operation is to last “for the foreseeable future as long as it’s working for everyone,” according to Coast Guard spokeswoman Alana Miller.
Stocks, Currency & Oil
As the first quarter came to a close this week, stocks leveled out and global stocks in particular spiked. Simultaneously, the number of Americans filing for unemployment benefits reached a more than 45-year low.
The Dow Jones Industrial Average rose 254.69 points to 24,103.11, the Nasdaq Composite increased by 114.22 points to 7,063.45, and the S&P saw gains of 35.87 to reach 2,640.87.
In Asian markets, the Nikei rose by 0.6% and Shanghai closed at an increase of 1.2%. The Hang Seng of Hong Kong leveled up 0.2% and the pan-European rose 0.44%.
In cryptomarkets, Bitcoin reached its second-worst levels on record, down 49% and trading around $7,715. The figures from the Wall Street Journal below demonstrate this drop over the course of the last three months.
Oil prices also saw an uptick, with US WTI crude at $64.62 a barrel, up 0.4% from the previous figure and Brent crude at $69.81 per barrel.
In currency, of particular note, the Chinese yuan is poised to reach its largest quarterly gain against the US dollar in a decade, as the dollar gains on the week as a whole but drops 2.1% in the first quarter.
LIMA CHARLIE NEWS
[Edited by Nikita Roach]
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