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German DAX-30 to Become Dax-40 – What Will Change?

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It was announced recently that the German Dax-30 index will be changing to DAX-40 aiming for a big shake-up in the market. The index has had 30 members since its establishment over 30 years ago, and it will be becoming bigger now. According to the information published by the country’s most important stock maker, the changes will start to become effective in September.

The largest index in the country is going to transform quite a lot, the biggest change being the number of companies listed. According to the chief investment officer of Commerzbank, the changes were necessary because of the economic situation in the country. According to him, it will better represent the country’s economy.

However, it should be noted that due to a large number of well-known industrial companies in the country, it might not perfectly resemble the economy of Germany. According to some, large pharmaceutical and laboratory companies, such as Sartorius, are very likely to move into the updated DAX.

In addition, some also anticipate that companies like Siemens Healthineers, Porche Holding, and many others might end up on the list as well. On the other hand, chances for companies like HelloFresh have decreased a lot over the past few weeks. According to market experts, this company is in a very tight race with other companies, such as Puma and Knorr Bremse, both of which are giants that are very well-known around the world.

What Do These Changes Mean?

The main reason behind the needed changes was the current situation of the German economy today. According to the decision, the membership of the DAX will mostly be decided according to the capitalization of the company in the market. This means the total stock market value of the company. It was also announced that the trading volume will no longer be taking presence in the listing.

As some sources indicate, the decision was made directly in response to the Deutsche Börse and the Wirecard scandal. After the scandal, many things have changed in the country. The Deutsche Börse now requires companies to submit annual financial statements as well as quarterly reports on time. As the company representative says, the rules have become more strict and stronger, which is further benefiting the whole DAX index.

Thanks to the steps taken by the country, the chances for similar scandals have become less possible. The new regulations in the country are planned to come into full effect on September 20. Starting from that, the composition of the DAX-40 will be reviewed twice a year, in March and in September.

While it is true that there are some major changes that will take place in the way DAC functions, it won’t be changing fundamentally. The experts are saying that more changes will be seen in another important index, MDax. According to the changes, the MDax index, which lists medium-sized companies, will include only 50 companies instead of today’s 60.

Thanks to these changes, the leadership of the country hopes to find ways to better represent the economy of the country in its listings, which will make these indexes more accurate.

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Source: https://www.forexnewsnow.com/top-stories/german-dax-30-to-become-dax-40-what-will-change/

Forex

Another banking giant joining the digital banking space

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Following the revolutionary updates in banking systems worldwide, UK has witnessed its first entire digital bank in 2015 when Revolut bank was introduced, offering a full range of services conducted wholly by digital means, no physical location and no employees, a pure virtual means of communication offering full banking services to its customer.

Digital banks started to emerge over the last few years to accommodate the recent technological advancement, and to mark the global movement towards everything going digital. Given the unprecedented events that we witnessed the last couple of years, most of the services were performed online, giving the path for more demands for innovative digital service, and giving the digital banks more reasons to exist

Despite the speculations around digital banks, there have been quite successful attempts in India, and in some Eastern European countries, where customers were able to receive banking service virtually, especially in the times of the pandemic, when people were locked in their houses, and everyone tried to social distance themselves from contact, digital banks become the main player in the services industry.

Competing at home

Revolut bank has been home alone so far, enjoying being the sole provider for such service in the U.K. which is about to be disrupted by JP Morgan Chase, the bank giant has decided to launch its neobank named “Chase”. which is set to initiate a direct competition between these two digital banks, yielding high-end services and quality at the user’s disposal.

This new digital bank is intending to introduce a comprehensive set of digital services based on simplicity and swiftness, where customers can open new accounts, change features for current accounts, handle investing and debt accounts, and order new debit or credit cards, all in an online application and without any human contact.

Customer concerns

While some customers might be suspicious about dealing with non-physical banks, it can be associated with the background of that very financial institute, it is challenging to gain customers’ trust when a wholly new name is emerging in the market. However, Chase seems to be relying on its name a classic bank, to gain a sense of trustworthiness among its future customers and is confident to gain customers’ satisfaction by providing a new system of rewards and cashback for account holders.

Another concern about being totally digital is the exposure to hacking attacks, which classic banks are facing every now and then, which can cause major damage considering that all the database and service options are virtually provided and handled. However, having a full range of services provided online, means that highly skilled cyber security developers are hired, and the database is in safe hands.

The future for physical banking

It is expected to shift entirely to a digital banking system within 10 years or so, which can be even sooner given that the whole world has changed in a course of 2 years, and if there will be a winner in this revolutionary change, it shall be the consumer who will enjoy the fruits of quality produces and serves as a result of a fierce competition

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Source: https://www.forexnewsnow.com/top-stories/another-banking-giant-joining-the-digital-banking-space/

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Forex

FX Market View #24

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A slew of central bank meetings in the week ahead will keep the markets engaged in monitoring the currency majors. Specific attention on Dollar strengthening as the market looks for potential trending patterns to emerge. All in all, there will be a release of policy data from 13 different central banks, divided across six major and seven emerging markets. The most significant data release to the global economies will be from the FOMC, however Norway’s central bank can steal some of the limelight. Since the pandemic struck over two years ago, Norges Bank would be the first high-income nation to raise interest rates. It will not surprise that the UK may follow suit behind Norway, however other G10 nations including; Sweden, Switzerland, Japan and the US are lagging behind.
 
The impact on the currency markets has been a pattern of strengthening from the Dollar. Coupled with a speculation of a hawkish tone from the Fed and surprisingly upbeat retail sales data, the Dollar continued its trend from the end of last week. Despite lower jobs growth in August and inflation remaining stubbornly elevated, the Fed rhetoric towards a path of tapering by the end of the year remains intact. However, making a connection from tapering to even a modest rate hike is still one step too far. The Dollar is still the major gainer for the week, advancing more significantly against the emerging currencies. Against the other majors, the currencies from nations which are lagging the rate hike recovery such as; Switzerland, Sweden and Japan are on the slide.
 
Another factor contributing towards a stronger Dollar is the fact that market risk is slowly waning. The lower levels of risk appetite throughout the financial markets since the end of last week, has adversely impacted the broader markets. Equity markets are on the decline, as well as global interest rate yields. Only the Yen and Swiss Franc are remaining firm, however this is mostly due to their status as a funding currency. Other G10 currencies are sliding under these market conditions, most notably the Aussie Dollar and Scandies. Unexpectedly, precious metals are not picking up the slack as investors seek alternative assets during periods of softer equity and yield markets. Other commodities such as oil and gas have pared recent gains.

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Source: https://www.blockleaders.io/fx-market-view-24/

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Tax reforms are coming for the United States

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The unprecedented events the world has witnessed over the last couple of years has done nothing but increasing the gap between the rich and the poor, while low-income families struggled to make living during the pandemic lockdown and unemployment, billionaires saw an increase in their wealth by $3.9 trillion between March and December of 2020, which is exactly what the IMF has warned about.

Biden has introduced in his last press conferences a new program to increase tax rates for the richest communities in the United States, as he stated “the rich got richer, and corporations have lost the accountability over their employees” the proposed tax raise is intended to finance the government aid programs, such as The American Families program which aims to increase the spending on healthcare, education, paid leave, and other areas that were hugely damaged by the unpleasant event the world has experienced over the last two years.

The newly proposed tax increase would tax the top individuals with 39.6% income tax, a 2.6% increase from the current 37%. While the top corporations will see a 5.5% increase to their tax rate to become 26.5% rather than the current 21%.

Facing opposition

While investors seem unbothered by this news, this tax hike is faced with big opposition by the U.S. Chamber of Commerce as well as other American business groups that will be highly affected by this proposed tax rise. Investors see this step as inevitable in the light of what global economies have experienced as a result of national lockdowns and increased unemployment rates around the world. Moreover, this step would help redistribute wealth among communities and improve the social benefit programs received by low-income families, and will eventually increase their spending which is better for the markets in the long run.

Democrats are looking for the vote of every Democratic senator over this bill, while this represents a real challenge because of the recent signs of cracks between the democrats in a previous vote to discuss the negotiation power over prescription drugs, President Biden is relying on the support of the American families who have always called for a similar program, and who will highly benefit from such move

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Source: https://www.forexnewsnow.com/top-stories/tax-reforms-are-coming-for-the-united-states/

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Amazon and Walmart are breaking the Financial code

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Nowadays, almost everyone can become a banker; all you need is the appropriate code. Global companies ranging from Mercedes-Benz as well as Amazon to IKEA and Walmart (WMT.N) are bypassing the conventional financial intermediary and instead relying on software from digital firms to provide clients with services ranging from personal banking to insurance. The danger signals are blazing for major financial firms. Using integrated finance – a fancy phrase for firms that integrate software to provide banking services – Amazon may allow consumers to “buy today, pay later” whenever they check out, and Mercedes owners can have their vehicles pay for their gasoline.

To be clear, banks continue to be the driving force behind the majority of deals, but on the other hand, traders and experts warn that conventional lenders risk being pushed farther away from the front end of the financial chain.

And it implies they will be far away from the mounds of information others are gathering about their clients’ tastes and behaviors – data that may be critical in providing them an advantage over banks in finance.

“Embedded financial services take the notion of cross-selling to new heights. It is based on a long-term software-based data connection between the customer and company “said Matt Harris, a partner at venture capital company Bain Capital Ventures.

For the time being, a lot of sectors integrated with finance are scarcely challenging banks’ supremacy, and while some innovators have licenses to offer regulated services like banking, they lack the volume and large financing pools of the major banks. However, it should also be noted that if financial technology businesses, or fintech, can replicate their performance in capturing a portion of electronic payments from banks – while also increasing their values – lenders may be forced to respond, according to experts.

Another important consideration

A large number of consumer-centric firms would be able to offer financial solutions which will enable them to dramatically improve their service experience,” remarked Luca Bocchio, partner at Accel. Traders have spent $4.25 billion into integrated financial firms so far this year, about three times the number in 2020, according to data supplied to Reuters by PitchBook.

DriveWealth, which sells technology that allows businesses to provide fractional benefit from trade, received $459 million in funding, while Solarisbank, a certified German digital bank that provides a variety of financial service software, received $229 million. Affirm (AFRM.O) shares soared last month after the latter announced a partnership with Amazon to provide BNPL goods, while rival U.S. fintech Square announced a $29 billion acquisition of Australian BNPL business Afterpay last month.

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Source: https://www.forexnewsnow.com/top-stories/amazon-and-walmart-are-breaking-the-financial-code/

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