DEGIRO: Broker Report

13 Nov 2017 | 08.54 am

DEGIRO: Broker Report

Amazon and Alibaba may soon be locking horns, while Catalonia's independence bid hasn't rattled Spanish markets

13 Nov 2017 | 08.54 am

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Paul Laverty (pictured), Head of Business Development Ireland with online broker DEGIRO, discusses major market stories for the next month

AMAZON AMAZES Following better than expected third-quarter earnings, the stock price for online retail giant Amazon surged more than 13% on the day to reach an all-time high. The company now sits at number four on the S&P 500 components list by market cap, behind Apple, Microsoft and Facebook.

Meanwhile, Amazon founder Jeff Bezos finished the day adding more than $10 billion to his net worth, surpassing Bill Gates as the world’s richest person. However, the e-commerce giant is not standing still but instead is gearing up for what may be its greatest challenge yet.

Recent plans show Amazon’s commitment to expanding into Southeast Asia. This would put Amazon in direct competition with Chinese giant Alibaba for the first time. Until now, the two have had relatively few instances of direct competition, with Amazon having limited presence in China and Alibaba not going ahead with expansion plans in the US.

Alibaba has outperformed Amazon in one respect for 2017: its return. Even with Amazon’s recent surge and impressive 39% return in the past year, this seems almost dwarfed by Alibaba’s 12-month return of 73%. Helping out may be the fact that Alibaba (which is also listed in New York) trades for under $200 per share, a fraction of Amazon’s recent high of just over $1,100.

CATALONIA QUESTION Last month, the Spanish autonomous community of Catalonia voted overwhelmingly, albeit with some discrepancies and a limited turnout, in support of independence from the Kingdom of Spain. Weeks later, the Catalan Parliament approved a resolution declaring independence by a vote of 70-10 after a walkout by pro-Spain MPs.

As the move toward Catalonia’s independence plays out, the effect on Spanish markets has actually been quite minimal. While the euro’s reaction was minimal on the news, Spain’s benchmark index, the IBEX 35, fell 1.5% to close the day. However, this was made back up the following trading day, following news that Spain will take control of Catalan institutions.

The move was led by Catalan-based banks CaixaBank and Banco Sabadell. Earlier in the month, the banks, which are the two largest in the region and among the top five largest in the country, moved their registered offices out of Barcelona. CaixaBank was able to do this thanks to assistance from the Spanish government, in the form of a legal modification facilitating company relocation in times of emergency.

Weighing decisions about the referendum, the banks took a preemptive stance against an independence move, limiting access to other regions of Spain and the rest of the European Union.

About Degiro

Offering fees on average 95% lower than competitors, DEGIRO clients trade with the lowest share dealing costs in Ireland. With low transaction costs, no minimums, and no annual or custodian charges, we don’t consider DEGIRO to be the cheaper alternative to investing so much as we see our competitors being needlessly expensive.

Clients of DEGIRO have access to over 60 markets across the world, can trade 700 ETFs commission free, and now have free real-time price feeds to US stocks. Additionally, clients in Ireland now pay no commission fee to invest across investment funds.

Originally from The Netherlands, DEGIRO started as an institutional broker in 2008 and began offering services to retail clients in 2013. DEGIRO is now one of the ten largest brokers in Europe and has won broker awards from the Financial Times and Investors Chronicle (UK), Beleggers Belangen (Netherlands), Investir (France), and Handelsblatt (Germany).

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