IntaCapital Swiss, Author at IntaCapitalSwiss SA

The ECB Leaves Interest Rates Unchanged

Written by IntaCapital Swiss on July 25, 2025. Posted in News & Reports. Leave a Comment

Today the ECB (European Central Bank) held interest rates steady with the key deposit rate* holding at 2%. To date, the ECB has cut interest rates eight times since June 2024 and President Christine Lagarde advised that the economy was now in a good place and growth is in line with projections or perhaps a little better. The president went on to say that having left interest rates unchanged that the ECB was now in a “wait and see mode” with the ECB shunning calls to reduce the cost of borrowing.

*Key Deposit Rate – The European Central Bank’s (ECB) key deposit rate is currently 2.00%. This rate is the interest banks receive when they deposit money with the central bank overnight. The ECB also sets other key interest rates, including the main refinancing rate (2.15%) and the marginal lending facility rate (2.40%). These rates are used to influence borrowing costs and economic activity in the Eurozone.

President Lagarde as advised above confirmed that the economy is growing in line with expectations however, she reminded the markets of the risks with the economy tilted towards the downside and said,” higher actual and expected tariffs, the strong euro and persistent geopolitical uncertainty are making firms more hesitant to invest”. She went on to say that “Wage increases are coming down and as growth has been developing in a relatively favourable way means we are now confident that the inflation shock of the last few years is behind us and our job is to look at what’s coming”.

The Vice President of the ECB Luis de Guindos, (previously Spain’s Minister of Economy, Industry and Competitiveness 2011 – 2018) warned growth will be almost

flat in Q2 and Q3 due to businesses front-loading to sidestep higher levies. Analysts and traders in the financial markets are betting that there will be one more rate cut before the end of the year with recent data released suggesting that a number of economists favour a rate cut at the next meeting on 11^th/12^th September. However, an executive member of the board Isabel Schnabel confirmed that the eurozone’s 20 nation economy is resilient and advised that the bar of another rate cut is very high.

Despite the comments Schnabel financial market experts advise that the decision to hold rates could be breather before steeper cuts than currently predicted in order to prevent the eurozone’s economy from stalling and to block a period of deflation*. Indeed, the threat of deflation is in the air due to disinflation* being rampant across the eurozone, plus intensifying Chinese competition and the ongoing threat of tariffs from President Donald Trump and his administration. As President Lagarde mused, we certainly will have to “wait and see”.

*Difference Between Disinflation and Deflation – Disinflation refers to a decrease in the rate of inflation, meaning prices are still rising, but at a slower pace. Deflation, on the other hand, is a sustained decrease in the general price level of goods and services, meaning prices are actually falling.

Collateralised Fund Obligations are Emerging as a Popular Route to Raise Finance

Written by IntaCapital Swiss on July 24, 2025. Posted in News & Reports. Leave a Comment

Collateralised Fund Obligations or CFOs have been around for nearly 25 years, they are a close relative of CDOs (Collateralised Debt Obligations) and are a vehicle for securitising real or alternative assets, including interest in real estate and infrastructure debt and equity, hedge funds, private credit funds, private equity funds. CFOs are basically a form of structured financing especially for diversified private equity or hedge fund portfolios, where several tranches of debt are layered ahead of equity holders. Essentially CFO’s slice and dice private portfolios into bonds, quite often with senior credit ratings from the likes of Standard & Poor,s, Fitch, and Moody’s, and issuers are able to borrow cheaply from an illiquid asset.

Experts suggest that typically CFOs bond issues are worth between 50% and 75% of the value of the holdings in the underlying funds and one of the reasons why the obligation have taken off is that private firms have been looking at ways to source more liquidity. Moreover, dealmaking has been at a low point exacerbated by President Trumps’ tariffs and the turmoil it has created thereby disrupting normal business models. Experts within the rating arena suggest that this market will continue to grow as the rating companies are having more and more CFO’s passing across their desks.

CFOs have become of particular interest to insurance companies and thanks to the NAIC (The National Association of Insurance Commissioners’) the industry regulator, who have allowed industry participants to increase purchases of CFO’s. On 1^st January this year the new rules took effect which cleared up any worries or doubts about capital treatment for securities and accordingly has allowed private capital firms to tap into the deep liquidity of the insurance market. The President of the NAIC recently said “Many of these (CFOs) are carefully designed, they are cashflow tested instruments to help insurers to meet their obligations in ways that some low yield public markets can’t”.

From a risk perspective the structure of CFOs have built-in safeguards which will include a “first-loss equity portion” which in the event of a decline in value or default will take the first hit. Furthermore, CFOs unlike vehicles such as CLOs (Collateralised Loan Obligations) who have single issuer risk, (financial troubles for one big borrower can trickle down throughout the market), CFOs have no such similar risk.

Currently there is no available data as to the size of the CFO market but experts suggest the market is relatively small however, in March of this year one bond rating agency advised that since 2018 it had assigned ratings to USD 37.7 Billion worth of CFOs with the bulk of these issues coming since 2022. It is important to point out that CFOs are different to CDOs (Collateralised Debt Obligations) which were mainly responsible for the Global Financial Crisis 2007 – 2009, where subprime mortgages were repackaged, however, with CFOs many of the underlying companies are private equity backed with millions in earnings.

Overview for Gold Q3 and Q4 2025

Written by IntaCapital Swiss on July 21, 2025. Posted in News & Reports. Leave a Comment

In Q1 and Q2 gold investment demand for the metal was strong with gold rising at a record setting pace of 26% (in US Dollars terms), this was mainly a result of global geoeconomics uncertainty, rangebound rates and a weaker dollar. Indeed, the US Dollar has had its worst start to the year since 1973 and with US Treasuries underperforming, (inflows faltered in April) due to heightened uncertainty in the U.S.A, inflows into gold ETFs* from all regions in the first half of the year was very strong. By the close of business 30^th June 2025 total AUM (Assets Under Management) for global ETFs totalled USD 383 Billion up 41%. Total holdings rose by USD 38 Billion equivalent to 3,616t which is the highest month end figure since August 2022.

*ETF or Exchange Traded Fund – allow investors to hold a multiple of underlying assets in this case gold. It is a type of investment fund that allows investors to gain exposure to the price of gold without physically owning the metal. It is essentially a mutual fund that buys and holds gold bullion and investors can buy and sell shares in the fund on a stock exchange.

Second Half of 2025

Analysts in the gold arena suggest that the consolidation of gold in the last few months and with technical indicators showing a pause within the current uptrend that has helped ease overbought conditions has set the stage for a potentially renewed upside. Furthermore, analysts suggest that continued global uncertainty, plus uncertainty with White House policies, (especially tariffs) together with falling interest rates will hopefully maintain investor appetite especially for OTC and ETF transactions. On the central bank front analysts suggest that appetite will remain strong, remaining well above the pre-2022 average of 500 – 600t but staying below previous records.

However, those within the gold arena warn that gold prices are probably going to continue to be elevated, possibly curbing consumer demand and encouraging recycling, thus putting a negative effect on a stronger gold performance. This neatly leads on to the flip side for gold where experts suggest gold could finish the year in a positive aspect but lose between 12% – 17%. Such figures are offered to the background of demonstrable and sustainable geoeconomic and geopolitical conflict therefore reducing the need for hedges such as gold as part of investment strategies, thus encouraging investors to take on more risk. The reduction in risk would according to experts lead to the aforementioned pullback (which is equivalent to the trade risk premium*) would be triggered by a stronger dollar and rising yields would reduce overall investment demand thus leading to outflows from ETFs.

*Trade Risk Premium – The trade risk premium for gold refers to the additional return investors expect to receive for holding gold above the risk-free rate as compensation for the inherent risks associated with investing in gold. These risks can include price volatility, potential lack of liquidity in specific markets, and the possibility of negative correlation with other assets during times of market stress. Essentially, it is the premium investors demand to hold gold instead of safer, risk-free assets such as treasuries or other safe government bonds.

Conclusion

Experts conclude that there are two scenarios regarding the future of gold in Q3 and Q4 of this year. 1. Should global financial and economic conditions continue to deteriorate further, thus applying more negative pressure on geoeconomic tensions which could further aggravate pressure on stagflation, flight to safe haven gold could potentially push the metal 10% – 15% higher. 2. The other scenario according to experts is that if there is across the board major resolutions in current conflicts such as Russia and Ukraine, Israel and Gaza plus Iran (seems fairly unlikely), then gold could well give back the gains made in Q1 and Q2 by as much as 12% – 17%. Given all the factors, analysts within the gold arena suggest that the way forward for the metal will remain dependent on monetary policy, trade tensions (tariffs), inflation and stagflation dynamics, and policy forthcoming from the White House.

Bitcoin Surges Past USD 120,000 Creating New Record

Written by IntaCapital Swiss on July 16, 2025. Posted in News & Reports. Leave a Comment

On Monday of this week, Bitcoin blew past the USD 120,000 mark creating a record price and hitting a high of USD 123,205 (up 3.4%) before pairing early gains to trade around the USD 121,600 mark. On the back of this rise, and clinging to the shirt tails of Bitcoin Ether, the second largest crypto token, advanced beyond the USD 3,000 barrier whilst a number of other smaller coins such as Uniswap and XRP also joined the bandwagon. Experts suggest that investor demand has been fuelled by crypto week (14th – 18th July), a term coined by the House of Representatives. Indeed, the House will consider the Clarity Act*, the Anti-CBCD Surveillance State Act**, the Senate’s Genius Act***, as part of Congress’ effort to make America the crypto capital of the world.

*Clarity Act – The Digital Asset Market Clarity Act aka the Clarity Act, is a proposed US law designed to establish a comprehensive regulatory framework for digital assets, specifically clarifying the roles of the SEC (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission) in overseeing these assets.

**Anti CBCD Surveillance State Act – This act prohibits unelected bureaucrats in Washington D.C. from issuing a CBDC (Central Bank Digital Currency), that undermines Americans’ right to financial privacy.

***Genius Act – This act refers to the Guiding and Establishing National Innovation for U.S. Stablecoins Act (a stable coin is a digital currency pegged one-to-one against a hard fiat currency, mainly the US Dollar) and is a piece of legislation aimed at regulating stable coins. The act establishes a comprehensive framework for stable coin issuance, custody, and use, including rules for issuers, custodians and digital asset service providers.

Analysts suggest that investor confidence is at a high and will probably stay there for a while especially as congress are considering the abovementioned bills. Post the election of Donald Trump for a second term in the White House, Bitcoin enjoyed a surge but then fell back trading either side of USD 100,000 for a number of months. The policies emanating from the White House did indeed have a negative effect on investor optimism regarding the President’s pro-crypto agenda, however, other U.S. assets that carry risks such as equities have now rebounded to just about their original highs, giving Bitcoin has once the impetus to move upwards.

Interestingly, institutional investors have also jumped on the Bitcoin bandwagon as confidence in the cryptocurrency has dramatically improved because despite the flip-flop chaotic trade policy of the current U.S. administration, Bitcoin has been steadily moving north. Since doubling in 2024 Bitcoin is up circa 30% since January 1st of this year, and last week investors piled into combined US Bitcoin ETFs with inflows of USD 2.7 Billion, furthermore the current rally has also been helped by crypto trades by the bears who all unwound their short positions last Friday. Data released showed those traders who were short of Bitcoin and had to unwind their trades, saw their positions wiped out to the tune of USD 1 Billion.

There are many in the Democratic party who oppose the introduction of the aforementioned bills to Congress, and Senator Elizabeth Warren last week made vocal her concerns regarding the package of bills, stating it could amount to an “Industry Handout”. She also noted that if passed into law, these bills could inject traditional cryptocurrency volatility into mainstream financial markets. Once upon a time, President Trump described Bitcoin as a “Scam”, but a complete U-turn showed him to be the biggest backer of the crypto world. His family are heavily invested in crypto world such as Bitcoin, Stable Coin crypto mining and sensationally the two meme coins $Trump and $Melania. He has promised to make America the crypto centre of the world, and it appears he will be living up to that promise.

Major Banks Have Ditched the Net Zero Banking Alliance

Written by IntaCapital Swiss on July 16, 2025. Posted in News & Reports. Leave a Comment

The NZBA (Net Zero Banking Alliance) was convened in April 2021 by the UN (United Nations) Environment Programme finance initiative and led by banks whose mission statement was to support efforts to align lending, investment, and capital market activities with achieving net-zero greenhouse gas emissions by 2050. Founding luminaries of the banking world were Citigroup, Bank of America, HSBC Group, and NatWest Group and 39 other leading global financial institutions.

However, the NZBA is under pressure, as back in January this year a number of U.S. banks left the group and most recently HSBC Group has followed suit. The general feeling is that the American banks resigned from the NZBA* as they were under pressure from the then President Elect Donald Trump as he was pushing for higher production of oil and gas thus spurring a backlash against the Net Zero climate bodies. A number of pro net-zero activists have accused the banks of pandering to the political pendulum, and their current efforts are to avoid criticism from the then in-coming Trump administration.

*American Banks No Longer with the NZBA – Citigroup, Bank of America, Morgan Stanley, Wells Fargo, Goldman Sachs, and JP Morgan all resigned before 1st December 2024.

Earlier this month, HSBC was the first British Bank to leave the NZBA, with the move perhaps a potential trigger for other British banks to follow suit. At the launch of the NZBA, the then CEO of HSBC Group Noel Quinn said it was “Vital to establish a robust and transparent framework for monitoring progress towards net-zero carbon emissions. We want to set that standard for the banking industry. Industry – wide collaboration is essential in achieving that goal”. Interestingly, HSBC’s new CEO, George Elhedery, confirmed back in late October 2024 that their Chief Sustainability officer Celine Herweijer had been removed from the bank’s top internal decision-making process, the “executive committee”. She subsequently resigned from HSBC shortly after being dropped from the executive committee.

Some experts have voiced little surprise that HSBC has resigned from the NZBA, citing not only have the top 6 US banks resigned but removing Celine Herweijer from her post on the executive committee may suggest that HSBC was taking a different path regarding climate control. CEO George Elhedery was quick to point out it was all part of a restructuring process and reaffirmed HSBC’s commitment to supporting net-zero. In January 2024, HSBC unveiled its first “net-zero transition plan” detailing its strategies to achieve its climate targets by 2050 (downgraded from 2030) plus its investment decisions it aims to undertake to facilitate decarbonisation across various sectors of finance. A number of senior voices in the net-zero world took issue with HSBC accusing the bank of profits at any cost.

Following their net-zero transition plan, the new Chief Sustainability Officer (not on the new Operating Committee) Julian Wentzel said back in February of this year that the bank would take a “more measured approach” to lending to the fossil fuel industry, giving way to concerns to the net-zero world that the bank would row back on its promises.

On HSBC’s website, it is written that targets for cutting emissions linked to their loan book “would continue to be informed by the latest scientific evidence and credible industry-specific pathways, which again bank detractors say is bank-speak for rowing back on its promises. Meanwhile in America, Republican politicians have instructed some banks to testify before the relevant policymakers who have accused them of unfairly penalising fossil fuel producers with their memberships of the NZBA and other similar groups. Experts point to the obvious political pressure put on banks to leave these organisations.

Elsewhere in the net-zero world and almost a decade on from the Paris Climate Agreement (under Trump the USA has withdrawn for the second time) the world’s largest companies who despite on-going promises and climate manifestos are still struggling to meet net-zero goals. A study produced by a well-known body suggests that only 16% of companies are actually on target to meet their 2050 net-zero goals and a well-respected senior voice in the climate control industry has said “to reach 2050 net-zero goals all of us need to move faster, together, to reinvent sustainable value chains using deep collaboration and transformative technologies”.

According to recently released data, global financing of fossil fuel companies has increased in 2024 (an increase of USD 162 Billion to USD 869 Billion) for the first time since 2021 with banks who have left the NZBA among the biggest funders. So where does this leave the NZBA in its efforts to get banks to increase financing for green projects? Obviously, the organisation is sad it has lost the previously mentioned banks but they still today have over 120 members and currently represents about 41% of banking assets.

Whilst some members have increased their fossil fuel financing some have made cuts to their financing with Santander making the largest single reduction in expansion finance (USD 2.2 Billion) and ING came top in terms of overall divestment slashing its annual fossil fuel financing by USD 3.2 Billion compared with their figure for 2023. Experts in the net-zero world say the NZBA is here to stay with many large banks still on the membership roll. Indeed, on April 15th this year in Geneva membership voted overwhelmingly in favour of backing plans to strengthen the support it provides to its members, marking a new phase for the Alliance’s work which is in line with the goals of the Paris Agreement.

In the Crypto World Are Stablecoins About To Become Mainstream?

Written by IntaCapital Swiss on July 16, 2025. Posted in News & Reports, Uncategorized. Leave a Comment

In the cryptocurrency arena, a stablecoin is a digital asset where the value is pegged to a fiat currency such as the US Dollar, the Euro, or the sterling pound. They can also be linked to other assets such as gold and other precious commodities. However, the preferred medium is as previously mentioned, a hard fiat currency thereby keeping its value on a daily basis and not being subject to volatility as can be seen in many other digital cryptocurrencies. Indeed, the stablecoin is being backed by White House and in particular by President Donald Trump and is gaining traction in a number of boardrooms across America. Interestingly a stablecoin launched by Donald Trump’s World Liberty Financial crypto venture, is being used by an Abu Dhabi investment firm for its USD 2 Billion investment into crypto exchange Binance.

Today there are rumours circulating that Bank of America, Uber, Amazon, and Walmart, are thinking about issuing their own stablecoins, whilst PayPal have already issued their own stablecoin PYUSD, which currently has an average daily turnover of circa USD 13.8 Million, (data from CoinMarketCap). Elsewhere, other banks and payment companies such as Mastercard and Visa are starting partnerships and investments to become part of the growing stablecoin mania and as far back as early December 2023, AXA Investment managers announced it had completed its first market transaction using stablecoins. So, what is the driving force propelling stablecoins towards the mainstream?

Proponents of stablecoins suggest that moving the processing of payments outside the global arena, (currently dominated by banks, Visa and Mastercard) may well make such processing cheaper, and the use of stablecoins will allow businesses and their clients/customers to bypass fees* charged by the payment networks. Furthermore, such proponents also suggest that companies/institutions that create their own stablecoins will help protect consumers while at the same time ensuring that the coins are easily redeemable. Regulators have already said that stablecoins must be backed on a one-to-one basis by liquid assets such as treasuries in America, or Gilts in the UK, or gold, or cash.

*Fees – Whenever a customer uses a bank card, it is subject to a transaction charge known as an interchange fee which covers processing costs as well as giving protection against fraud and other risks. The rates for fees are set by the payment networks and can vary from country to country, and data shows that the banks get the lion’s share of the fees which in 2023 for America alone totalled USD 224 Billion.

Donald Trump and his administration are very much in favour of stablecoins and in order to ensure everything moves forward in a proper manner they have created the “Genius Act”. The details of this act are currently being finalised and it will create a regulatory framework whilst at the same time giving the go ahead for banks to enter the stablecoin market. However, stablecoins do have their detractors and among them are central banks who say the coins are a poor substitute for money and whilst they are backed by assets recognised by regulators and the financial markets, they currently still need to be converted into fiat cash.

for utilisation in many day-to-day transactions. Stablecoins therefore fail as a useable currency as according to central banks the coins fail a crucial test generally referred to as the “Singleness of Money”*.

*Singleness of Money – The BIS (Bank for International Settlements) the BOE (Bank of England) and other central banks and regulators in major capitals of the world have recently expressed doubts over stablecoins as they may undermine the “Singleness of Money”. They define singleness as the principle that all different forms of money must have the same value at all times and be interchangeable at par without cost. Furthermore, the central banks and regulators have pointed out that stablecoins which currently circulate outside of the traditional payment systems trade on secondary markets as bearer instruments, can experience disparities from their pegged value and deviate in purchasing power from their pegged currency.

Other detractors suggest that the payment systems already in place are competitive, highly sophisticated with anti-fraud measures already built into the systems. Furthermore, credit card users are very protective of the “perks” or rewards they get with using their cards such as airmiles, with some experts suggesting that card users will be loath to lose their rewards. Be that as it may, analysts suggest that stablecoins will find their place in society and the financial markets especially in the United States which includes the backing of the President, Donald Trump.

Emerging Markets Debt Could Potentially Hit Record Sales in 2025

Written by IntaCapital Swiss on July 9, 2025. Posted in News & Reports. Leave a Comment

Experts in emerging market debt advise that global issuance volumes in this sector year-on-year were up 20% for Q1 and Q2 for 2025, with issuances growing particularly quickly from the corporate sector. The boom in debt sales have defied missile attacks, an oil market with gyrating prices, and US policy, and tariffs putting a strain on global trade, resulting in a major increase in demand for local bonds who are having their best Q1 and Q2 in 18 years. White House policy has seen the greenback fall circa 11% this year, which has led to a fall in investor confidence resulting in an index of emerging market local debt to return in excess of 12% in the first half of 2025.

Regarding the fall in the value of the US Dollar, experts suggest that this has sent fund managers, asset managers, and the rest of the money managers to look elsewhere for better returns, and as a result, the markets have seen a surge in demand for fixed-income assets in emerging market currencies. Data released shows that hard currency bonds are only up 5.4% in the first half of this year as opposed to 12% as mentioned above in the emerging market arena, all this against the backdrop of the US Dollar having its worst performance since 1970 and falling against 19 of 23 of the most traded emerging market currencies.

Figures released by EFPR data (formerly known as Emerging Portfolio Fund Research) show circa USDD 21 Billion (an unprecedented amount) flowing into EM-debt funds, with some Latin American bonds returning some considerable gains. For example, some Brazilian government bonds have returned in excess of 29% whilst local bonds from Mexico (known as Mbonos) have generated a gain of 22%. Elsewhere, experts suggest that Ghana (Africa’s top gold producer) will, due to short-term borrowing costs falling to their lowest level in three years, resume domestic bond sales later this year.

The following is a part overview of data released regarding the total return year-to-date on emerging market bonds, Brazil Notas de Tesouro Nacional Serie F – 20.2%, Brazil Letras do Tesouro Nacional – 26.0%, Mexican Bonos – 21.7%, Poland Bonds – 19.9%, Hungary Bonds – 19.1%, Czech Republic Bonds 17.8%, Mexican Cetes – 17.4%, Nigeria Bonds – 15.8%, Egypt Bonds 15.0%, Romania Bonds – 14.9%, Taiwan Bonds – 13.8%, South African Bonds – 13.2% and Colombian TES – 12.8%.

Since the beginning of the year, data released shows emerging markets companies and governments having sold USD 331 Billion in debt in hard currencies such as the greenback and the Euro. However, not all future roads to emerging markets fixed income products are paved with gold, as tariff increases may yet put a dent in some country’s ability to issue new bonds. Donald Trump will be reviving tariff targets in the second week of this month, indeed, yesterday the White house announced that letters had been sent to 14 countries informing them new tariffs will be enforced on 1st August this year. The president also has stressed that he will put an additional 10% tariff on any country aligning themselves with “the Anti-American policies of BRICS*”, confirming “There will be no exceptions to this policy”.

*BRICS – Is an intergovernmental agency and is an acronym for Brazil, Russia, India, China, (all joined 2009) followed by South Africa in 2010 as the original participants. Today, membership has grown to include Iran, Egypt, Ethiopia, and the United Arab Emirates and Saudi Arabia, with Thailand, and Malaysia on the cusp of joining. Russia sees BRICS as continuing its fight against western sanctions and China through BRICS is increasing its influence throughout Africa and wants to be the voice of the “Global South”. A number of commentators feel as the years progress, BRICS will become an economic and geopolitical powerhouse and will represent a direct threat to the G7 group of nations. Currently this group represents 44% of the world’s crude oil production and the combined economies are worth in excess of USD28.5 Trillion equivalent to 28% of the global economy.

It is believed by experts that the capture of the “Global South” encompasses all of Africa and South America, and BRICS seemed determined to have their own currency and move away from the US Dollar. President Trump views this as a direct threat to the USA and western Europe and will probably follow through on his threats to BRIC aligned countries. However, as President Trump alienates many of America’s traditional allies, BRICS are positioning themselves to replace the United States in the ground that Trump has ceded. The second half of 2025 will be interesting and over the next few months the markets will see if the increase in fixed-income volumes from emerging markets runs out of steam or goes on to new record highs.

Indian Regulators Come Down Hard on India’s Options Market

Written by IntaCapital Swiss on July 9, 2025. Posted in News & Reports. Leave a Comment

Over the last five years, India’s equity derivatives* market has become the largest in the world, with a daily turnover (including options**) of circa USD 3 Trillion. India’s SEBI (the Securities and Exchange Board of India) has recently become concerned regarding this area of the market, where it feels that certain large participants have been allegedly using manipulative practices through the use of sophisticated technology, thereby gaining illegal profits and thus affecting the market’s integrity.

*Equity Derivatives – A derivative is a contract (e.g. futures, forwards, swaps and options) whose value is derived from the performance of an underlying asset for example, bonds, commodities, currencies interest rates, or in this case equities or stocks and shares. An equity derivative is a financial instrument which derives its value from the performance of the underlying stocks or shares and allows investors to gain exposure to the equity market without owning the underlying shares, and are widely used for hedging, speculation, and investment purposes.

**Options – A financial option is a contract that gives the owner or the holder the right but not the obligation, to buy or sell an underlying asset, (in this case equities, stocks) set at a specific price, (the strike price) on or before a certain date (expiration date). Options are a type of derivative meaning their value is derived from the underlying asset.

The SEBI are currently investigating an American company Jane Street Group over alleged irregularities manipulation of trades in the above market, but according to officials, (who wish to remain anonymous) the investigation will expand to cover wider markets. The markets being investigated are the Mumbai based NSE, (National Stock Exchange of India Ltd.’s) flagship gauge, the Nifty 50*, and BSE (Bombay Stock Exchange) Ltd.’s benchmark Sensex**. The SEBI flagged manipulated and fraudulent trades that mainly took place in the Nifty 50’s weekly options contracts and its underlying constituents in the cash market.

*Nifty 50 – This is India’s leading stock market index and represents the performance of the 50 largest and most liquid companies listed on the NSE. It serves as a benchmark for the Indian equity market and is used by investors and analysts to gauge market trends and the overall health of the Indian economy.

**BSE Sensex – Sensex stands for Stock Exchange Sensitive Index and is one of the oldest indices of India and consists of 30 stocks which are listed on the BSE and represent some of the largest corporations which are also the most actively traded stocks. The BSE is allowed to revise the listing periodically and this usually takes place twice a year in June And December. Sensex is crucial to investors as it gauges market movements and aids understanding in the overall sentiment of the economy and industry-specific developments.

Last week, on Friday, July 4th, 2025, the SEBI through an interim order announced they would be seizing Rupees 48,4 Billion (USD 570 Million) from Jane Street in what they said was unlawful gains made by the company. In consequence, and after an in-depth investigation, the SEBI has barred four Jane Street entities from accessing its securities markets including the confiscation of the aforementioned rupees. Furthermore, the SEBI have accused Jane Street of adopting an “Intraday Index Manipulation Strategy” whereby in early day trading the company aggressively bought constituent stocks and futures thereby pushing up the index, followed by aggressive selling later in the day where the trades were reversed.

The SEBI concluded that the trading actions employed by Jane Street lacked any economic rationale and were designed specifically to artificially move index levels to benefit their trading positions whilst at the same mislead other market participants. Headquartered in New York, Jane Street Capital employs more than 2,600 people in six offices in New York, London, Hong Kong, Singapore, Amsterdam, and Chicago and trades a broad range of asset classes on more than 200 venues in 45 countries. The company totally refutes the allegations.

Is the US Dollar Under Threat Due to the Policies of Donald Trump?

Written by IntaCapital Swiss on July 2, 2025. Posted in News & Reports. Leave a Comment

Donald Trump was inaugurated on Monday 20th January 2025, and since his elevation to the White House, the greenback has lost over 10% of its value against the Swiss Franc, Sterling, and the Euro. Global investors have been turning away from President Trump’s policies, and there is no better measuring stick for their renunciation of his policies than the US dollar. The last time the US Dollar fell so badly was post the Global Financial Crisis 2007 – 2009, when in 2010 the Federal Reserve in order to prop up the economy was excessively printing money.

However, this time around there is no global financial crisis; it is the policies coming from the White House such as expanded global tariffs, the on-going fight between President Trump and the Chairman of the Federal Reserve to push interest rates down, where Chairman Jerome Powell* refuses to budge. Furthermore, there are two further policies which are scaring investors such as the open legal warfare against those who stand up against his policies, and “the big beautiful bill” which has just passed the Senate 51-50, which many experts feel will add to an already massive deficit. These are just a few of the pillars that make up the current administration’s policy and according to the value of the US Dollar are driving global investors away.

*Jerome Powell and Tariffs – On Tuesday of this week, The Chairman of the Federal Reserve Jerome Powell noted that the FOMC (Federal Open Market Committee) would probably have reduced interest rates further without the White House’s policy of expanding global tariffs. He went on to say, “In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs. We think the prudent thing to do is to wait and learn more and see what the effect might be”.

Experts suggest that tariffs will put upward pressure on inflation and certainly slow economic growth, and the President continuing to flip-flop on the specifics of levies and halting progress on trade agreements has given much worry and uncertainty on the outlook of the US economy. However, having said that, recently released economic data shows that tariffs have yet to impact prices or the labour market with further data showing that job openings rose in May, the highest level since November 2024.

Interestingly, many market experts, traders, economists, and analysts suggest that Donald Trump and his colleagues are ambivalent to the fall in the US Dollar. When questioned as to whether they support a strong dollar, the answer is always inevitably “yes” but little seems to be done in halting the current decline. Analysts suggest the financial markets feel that the White House is happy to see the US Dollar slide downwards in order to boost manufacturing in the United States.

Such speculation has led some observers to suggest that the President is playing with fire as the cost of financing the government has exploded to over USD 4 Trillion as the budget deficit continues on its path like a runaway train. Financing mainly comes from overseas

investors, and when it comes time sell up and bring their money home, a sliding greenback means they lose money. This, some observers feel, could lead to a vicious cycle where global investors continue to pull their funds out of the USA driving up borrowing costs resulting in further declines in the US Dollar with further economic uncertainty and so on and so on. If overseas investors get a whiff that a declining greenback is government policy the results could be catastrophic for the US Dollar.

As the world’s reserve currency, the US Dollar is already on the decline because at the close of business 2014 data showed the greenback accounted for 65% of global foreign exchange reserves and as at close of business 2024 this figure stood at 58%. However, that said, swift data shows that as recently as August last year the US Dollar is used in 49.10% of global payments and as at December 2024 data shows that 54% of global traded invoices are transacted in US Dollar and 88% of foreign exchange transactions are done in USD Dollars.

Analysts agree that in the near future, the US Dollar will undoubtedly keep its status as the world’s reserve currency. However, if the US Dollar continues to slide it will come under severe pressure from foreign investors, and there are already mutterings coming out of the ECB (European Central Bank) that the Euro could, in a few years’ time, be in a position to take over the mantle of the world’s reserve currency. The US has amassed a debt pile of USD 29 Trillion (100% of GDP) and it’s not stopping, it has lost its last remaining AAA rating and the budget deficit over the past few years has increased to 6% of GDP. President Trump without a doubt will have some short-term problems coming his way, but will things have turned around by the end of his presidency, and what will his legacy be?

Is the Russian Banking System Close to a Systemic Crisis?

Written by IntaCapital Swiss on July 1, 2025. Posted in News & Reports. Leave a Comment

Experts in the Russian banking arena, plus a number of Russian banking officials themselves, have advised that the banking system in Russia is close to a systemic* crisis. A number of officials within the Russian banking community have advised that bad debt on Russian banks’ balance sheets is in the trillions of rubles. Although official figures may mask the extent of the problem, an increasing number of retail and corporate clients are either deferring or defaulting on interest and principal loan repayments.

*Systemic Banking Crisis – this occurs when a significant number of banks within a country experience severe financial distress simultaneously, potentially jeopardising the entire financial system.

A timeline for this crisis of around 12 months is currently being bounced around by economists, experts, and Russian banking analysts. A number of officials have cited the alarm felt by banks over the non-payment of loan interest, as well as the non-repayment of loan principals. Many experts feel that the corporate and retail sectors within the Russian economy are struggling with high interest rates, with the key benchmark interest rate currently sitting at 20%. If circumstances fail to improve, a debt crisis may well spread through the whole banking community.

Experts contend that Russia’s two-tier economy is impacting the private sector as businesses have to contend with rising costs, slower demand, and decreasing prices for exports. On the other hand, huge benefits have been realised by massive state spending on Russia’s war machine and military industrial complexes. What is not well documented is the favourable loans that banks granted to help fund the war effort, and experts are hearing that there is more pressure on Russian banks as they seek repayments for these loans.

Headquartered in Moscow, ACRA is Russia’s rating agency which, in May of this year, warned of a “deterioration in the quality of loan debt”. They also went on to report that 20% of the entire Russian banking capital is tied up with borrowers whose creditworthiness is under severe scrutiny and may be downgraded due mainly to high interest rates. Furthermore, the military war machine’s appetite for more labour has severely impacted this market, resulting in massive labour shortages. At the same time, this has boosted the earnings of those in work, causing inflation to a peak at 10%.

At the recent St Petersburg International Economic Forum, the Russian Economy Minister said, “We are on the verge of slipping into recession”. However, in a speech the following day, President Putin said, “Some specialists, experts, point to the risks of stagflation and even recession. This, of course, should not be allowed under any circumstances”. A number of political experts read this statement as Putin essentially saying this has nothing to do with me, it is officials who need to put this right. However, Russia is in the middle of a credit crunch, with data showing that Russian banks’ corporate loan portfolio is set to decrease by Rubles 1.5 Trillion (USD 19 Billion) in Q1 of 2025.

In mitigation of the credit crunch, and for the first time in three years, the Central Bank cut its benchmark interest rate to 20%, with many experts and analysts saying that the rate is still far too high. However, earlier this month the Kremlin-linked CMASF (Centre for Macroeconomic Analysis and Short-Term Forecasting) said there is an increased likelihood of a run on Russian banks. The CMASF also went on to say that the MOEX (Russian Stock Market) is a good indicator of heightened economic uncertainty, and it experienced a sharp drop after new sanctions threats by President Trump and his taunt that Putin is crazy.

On the sanctions front, President Trump has so far held off on his threats as it appears he really does not want to go to war with Putin – especially through the non-military option of sanctions. However, the European Union is already in discussions about further sanctions on the Russian banking sector, which could negatively impact the sustainability of Putin’s war on Ukraine. However, without further sanctions, the current Russian economy definitely has a negative outlook and, with rising inflation, labour shortages, and declining growth, could severely hamper Putin’s ability to sustain the current war with Ukraine. However, if there is a full-blown banking crisis – all bets are off, and who knows what the Kremlin might do to sustain not only the current war, but the status quo with the Russian population.

Author: IntaCapital Swiss