Loding Loading ...
X
لا تقدم سنشري للاستشارات والتحليل المالي ش.ذ.م.م (سنشري) خدمات استشارية استثمارية أو خدمات إدارة المحافظ ولا تضمن العوائد الاستثمارية. كما أننا لا نقبل ولا ندفع بعملة مشفرة أو عملة رقمية. موقعنا الإلكتروني الرسمي هو www.century.ae. احذر من الشركات المحتالة أو المواقع الإلكترونية التي تتظاهر بأنها شركة سنشري. لسنا مسؤولين عن أي خسائر تنجم عن استخدام مواقع إلكترونية أو كيانات مزيفة. ينطوي التداول في الأسواق المالية على مخاطر خسارة كبيرة قد تفوق الودائع وربما لا يناسب جميع المستثمرين. قبل أن تبدأ، يُرجى التأكد من فهمك التام للمخاطر ذات الصلة.
  • EN EN
Century Financial Consultancy
Back

Wednesday, November 27, 2024

THE TRUMP EFFECT: How Deregulation is Supercharging the FinTech Sector

تم إعداد هذا المنشور من قبل سنشري للاستشارات

THE TRUMP EFFECT: How Deregulation is...
THE TRUMP EFFECT: How Deregulation is Supercharging the FinTech Sector

FinTech stocks are benefiting from what’s being called the "Trump trade" effect. Trump’s election-victory has made several sectors more attractive, like energy, cryptocurrency, and banking. Among these, FinTech too stands out as a sector that is expected to perform well under his administration.

 

The main reason? A potential shift in the regulatory environment.

Trump’s administration is expected to favour deregulation and adopt a more business-friendly stance, which could benefit FinTech stocks. This contrasts the Biden administration, under which the SEC maintained stricter sector oversight. Additionally, Trump has previously expressed interest in making changes to SEC leadership, including replacing the current Chair, Gary Gensler, who previously led crypto industry crackdowns. This idea has been supported by Elon Musk, the administration’s new efficiency leader, who aligns with Trump’s views on deregulation to spur innovation in these sectors. As this regulatory pivot unfolds, the five FinTech stocks below are placed well to likely thrive in the new regulatory environment.


Source: Bloomberg
Date: 20th November 2024
*Last Price: 19th November 2024


   

Robinhood has spent years battling regulatory hurdles, but Trump’s election win signals a potential turning point. This shift likely drove Robinhood’s stock up 40% since November 5th. A major factor is the potential for a new SEC Chair, as current Chair Gary Gensler had targeted Robinhood offering crypto products, accusing them of violating securities laws, claims Robinhood has denied. Republicans, including Trump, see these crackdowns as excessive, arguing they stifle U.S. innovation. A Trump administration could ease regulations, allowing Robinhood to expand its crypto offerings. For perspective, currently Robinhood lists only 19 cryptocurrencies vs Coinbase’s 263. Adding more, especially meme coins, could boost profits as they are traded more actively than Bitcoin & Ether. Lighter regulations may also draw more retail investors, as seen in Bitcoin’s recent rally past $93,000. On a new note, Robinhood’s app downloads on Apple and Google Play have surged recently, signalling renewed retailer interest. With a friendlier regulatory environment on the horizon, opportunity to offer more coins and tapping into a rising wave of retail participation could possibly be beneficial for the company.


Affirm is a tech company offering buy-now-pay-later (BNPL) services. During Biden's presidency, the Consumer Financial Protection Bureau (CFPB) increased scrutiny of BNPL companies, including launching a rule in July to tighten oversight. Trump could reverse this rule if he returns to office. The CFPB was much less active during his first term, which could work in Affirm's favor. Among BNPL stocks, Affirm is particularly impacted by U.S. regulations since 96% of its revenue comes from domestic markets. For comparison, PayPal earns only 42% of its revenue from the U.S., making Affirm more directly tied to changes in the U.S. regulatory environment.

 

Block, a tech company focused on financial services, could see gains under Donald Trump’s second term. Its crypto connection is clear—Bitcoin contributes 3% of its gross profits, and Block has been expanding into Bitcoin mining and self-custody wallets. Block has faced regulatory scrutiny from FinCEN and the CFPB over its Cash App and Afterpay services in the past. With less oversight expected under Trump, the company could rely more heavily on its Cash App. Block generates about 93% of its revenue domestically, making it highly influenced by U.S. policies. Block also has potential to join the S&P 500 index, a significant milestone. Of 48 analysts, 36 are bullish on the stock. Additionally, a business-friendly environment could boost small and medium-sized businesses, which make up a large portion of Block’s merchant base.


Bill Holdings also benefited from the broader rise in fintech sector. The company had struggled for years with slow growth in the SMB and software market, but with Trump’s election, investors now expect better prospects. Since the election, financial stocks, including Bill, have surged. A solid first-quarter earnings report, with an 18% revenue increase, further fuelled the stock’s momentum. Bill also raised its fiscal year guidance. Payments stocks are expected to do well driven by rising crypto prices and continued hopes for deregulation. Moreover, investors are betting that Trump’s policies will favor small-cap stocks. If this trend holds, it should benefit SMBs like those that make up Bill’s customer base.


Moneylion, a digital banking platform offering personal loans, cash advances, and investments, could thrive under Trump-era policies. His administration’s relaxed lending rules aimed to simplify credit access for businesses and consumers, directly benefit companies like Moneylion. Deregulation could enable faster loan approvals, making it easier for more consumers to borrow. For Moneylion, this would mean a larger customer base, higher loan volumes, and increased revenue.

Risks and Assumptions related to Back-tested trading strategies
The risks and assumptions listed here are not intended to be an exhaustive summary of all the risks and assumptions involved.
The strategy might suffer from look-ahead bias which occurs due to the use of information or data in a study or simulation that would not have been known or available during the period being analyzed. This can lead to inaccurate results in the study or simulation.
Future price movements may not be exactly the same as the historical price movements and this could lead to variation in performance.
Testing can sometimes lead to over-optimization. This is a condition where performance results are tuned so high to the past they are no longer as accurate in the future.
The model assumes no slippages in trading. Slippage refers to the difference between the expected price of a trade and the price at which the trade is actually executed.
The back-tested strategy might be at risk of data dredging, which is the behavior of testing multiple hypotheses at one time, resulting in picking the data that best supports your main hypothesis.
Drawdowns in actual trading can be higher than the tested system and losses could be significant in the event of leverage.
Unforeseen events can lead to variation in performance from the tested trading strategy.
The tested result has been computed with price feeds available from Bloomberg.
The testing environment has not considered transaction or any other costs.
Trading indicators used for the purpose of testing has been provided by Bloomberg.
The strategy might suffer from data mining fallacy, selection bias and backfill bias.
A trading strategy that performs well on multiple datasets from one market (e.g., forex) might not perform as well in another market (e.g., stocks).
The strategy may not depict accuracy in terms of spread changes due to the spread-widening events.

Disclaimer:Century Financial Consultancy LLC (CFC) is duly licensed and regulated by the Securities and Commodities Authority of UAE (SCA) under license numbers 20200000028, 20200000081 and 301044 to practice the activities of Trading broker in the international markets, Trading broker of the OTC derivatives and currencies in the spot market, Introduction, Financial Consultation and Financial Analysis, and Promotion. CFC is a Limited Liability Company incorporated under the laws of UAE and registered with the Department of Economic Development of Dubai (registration number 768189). CFC has its registered office at 601, Level 6, Building no. 4, Emaar Square, Downtown, Dubai, UAE, PO Box 65777.

PLEASE READ THE FOLLOWING TERMS AND CONDITIONS OF ACCESS FOR THE PUBLICATION BEFORE THE USE THEREOF.

Please carefully read the terms and conditions before using the Publication (which means and includes this document/flyer, charts, diagrams, illustrations, images, and all of its contents) ("Publication"). By accessing and continuing to use the Publication, you acknowledge and accept the terms and conditions outlined in this Disclaimer ("Disclaimer"). CFC holds the right to modify or update the Publication and the Disclaimer at any time without any prior notice. Your access and usage of the Publication post the modifications or updates to the Disclaimer will constitute your agreement to abide by the revised terms and conditions. If you do not agree with the contents of this Disclaimer please refrain from using the Publication. Any terms and conditions you propose that may contradict this Disclaimer are liable to be rejected by CFC and shall be considered null and void.

This Publication is a marketing material. It has not been prepared in accordance with legal requirements intended to promote the independence of investment research and, therefore, is a straightforward marketing communication. This Publication's opinions, news, research, analysis, prices, and other information comprise a general market commentary and do not represent the opinion or advice of CFC or any form of personalized or investment advice. Accordingly, CFC is not liable for any loss or damage, including but not limited to any loss of profit, that may arise directly or indirectly from using or relying on this Publication.

The information in this Publication cannot disclose everything about the nature and risks of the abovementioned data/information. Therefore, this is not an exhaustive list of the risks involved. Please refer to our website for the complete Risk Disclosure Statement.

Charts, graphs, tables, calculations of profit and loss, leverage, scenario analysis, other numbers and calculations and related data or information provided in this Publication are intended for illustrative purposes only. The information contained in this Publication is prepared as of a particular date and time and will not reflect subsequent changes in the market or any other factors relevant to their determination. All statements as to future matters are not guaranteed to be accurate. CFC disclaims any obligation to amend or revise any forward-looking statements to reflect new information, events, or circumstances after the date of this Publication or to reflect the occurrence of unanticipated events. The Publication may contain forward-looking statements and projections based on current market conditions and an assessment of future trends. Actual results may differ materially from those projected. CFC does not guarantee the accuracy or reliability of any such statements.

No information given in this Publication should be construed as an endorsement of any particular security, company, or industry, offer, recommendation, or solicitation to purchase or dispose of any securities/financial instruments/products or to enter into any transaction or adopt any hedging, trading or investment strategy. The data/information contained in the Publication is not designed to initiate or conclude any transaction. Neither this Publication nor anything contained herein shall form the basis of any contract or commitment whatsoever. Distribution of this Publication does not oblige CFC to enter into any transaction.

The Publication should not be considered legal, regulatory, credit, tax, or accounting advice. Anyone proposing to rely on or use the information contained in the Publication should independently verify and check its accuracy, completeness, reliability, and suitability and obtain independent professional advice. The Publication does not take into account the investment objectives, financial situations, and specific needs of recipients. The recipient of this Publication must make independent decisions regarding whether this communication and any securities or financial instruments mentioned herein are appropriate in the light of their investment objectives, investment experience, financial situation, existing portfolio holdings and/or investment needs. Recipients will need to decide on their own as to whether or not the contents of this Publication are suitable for them.

Information contained in this Publication is based on various sources, including but not limited to public information, annual reports, and statistical data that CFC believes to be reliable. However, CFC makes no representation or warranty as to the accuracy or completeness of any report or statistical data made in or in connection with this Publication and accepts no responsibility whatsoever for any loss or damage caused by any act or omission taken as a result of the information contained in this Publication. In addition, the names used to describe various financial products or instruments in this Publication may vary from the ones used on different trading platforms.

All views expressed in all reports, analysis and documents are subject to change without notice. CFC may have issued other reports, analysis, or other documents expressing different views from this Publication. In addition, staff members/employees of CFC may provide/present oral or written market commentary or analysis to you that reflect opinions contrary to the opinions expressed in this research and may contain insights and reports inconsistent with the views expressed in this Publication. Neither CFC nor any of its affiliates, group companies, directors, employees, agents, or representatives assume any liability, nor shall they be made liable for any damages, whether direct, indirect, special, or consequential, including loss of revenue or profits that may arise from or in connection with the use of the information provided in this Publication.

Information or data provided by means in this Publication may have many inherent limitations, like module errors or lack of accuracy in its historical data. In addition, data included in the Publication may rely on models that do not reflect or consider all potentially significant factors such as market risk, liquidity risk, interest risk, credit risk etc.

CFC and its affiliates reserve the right to act upon or use the contents hereof at any time. The use of our information, products and services should be on your own due diligence and you agree that CFC is not liable for any failure to achieve the desired return on investment that is in any manner related to availing of services or products of CFC and use of our information, products and services. You acknowledge and agree that past investment performance is not indicative of the future performance results of any investment and that the information contained in this Publication is not to be used as an indication for the future performance of any investment activity. Any prices provided in this Publication are indicative only and do not represent firm quotes as to either price or size.

This Publication is being furnished to you solely for your information and neither it nor any part of it may be used, forwarded, disclosed, distributed or delivered to anyone else. You may not copy, reproduce, display, modify or create derivative works from any data or information contained in this Publication. This document may not be published, circulated, reproduced, or distributed in whole or part to any other person (whether within or in a jurisdiction outside UAE) without the prior written consent of CFC.

Declaration of the Financial Analyst: The Analyst(s) who prepared this report certifies that the opinions contained herein exclusively reflect his or her views. The Analyst further undertakes that he or she has taken reasonable care to maintain independence and objectivity in respect of the opinions herein. The Analyst(s) who wrote this report does not hold securities in the Company mentioned in the report (“Company”). The Analyst(s) confirms that he or she and his / her Associates do not serve as directors or officers of the Company, and the Company or other third parties have not provided or agreed to provide any compensation or other benefits to the Analyst(s) in connection with this report. An “Associate” is defined as the spouse, parent or step-parent, or any minor child (natural or adopted) or minor step-child of the Analyst. The Analyst(s) receives a fixed compensation from CFC. No part of his or her compensation was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this report. The business solicitation or marketing departments of CFC are separate and independent from the reporting line of the Analyst(s).

Trading in financial products carries risk. Trading in leveraged Over-The-Counter (OTC) Derivative products including Contracts for Difference (CFDs) and spot foreign exchange contracts involves a significant risk of loss which can exceed deposits and may not be suitable for all investors. OTC Derivative products / CFDs are complex financial instruments that do not confer any claim or right to the underlying financial instrument. Transactions in these instruments are very risky, and you should trade only with the capital you can afford to lose. Before deciding to trade on these products, you should consider your investment objectives, risk tolerance, and your level of experience. Accordingly, you should ensure that you understand the risks involved and seek independent advice from professionals, if necessary.

View More