- World stocks down 20% in worst year since financial crisis.
- Wild swings in commodity and FX due to rate rises and war.
- Crypto crashes and defaults have added to volatility.
LONDON: Trillions of dollars wiped off world stocks, bond market tantrums, whip-sawing currency and commodities and the collapse of a few crypto empires — 2022 has been perhaps the most turbulent year investors have ever seen, and for good reason.
Tallying the final numbers is useful but doesn’t even come close to telling the whole story.
Yes, global equities are down $14 trillion and heading for their second worst year on record, but there have been nearly 300 interest rate hikes and a trio of 10%-plus rallies in that time making the volatility freakish.
The main drivers have been the war in Ukraine, combined with rampant inflation as global economies broke out of the pandemic, but China remained shackled by it.
US Treasuries and German bonds, the benchmarks of global borrowing markets and traditional go-to assets in troubled times, lost 16% and 24% respectively in dollar terms.
DoubleLine Capital’s Jeffery Gundlach, dubbed the ‘Bond King’ in the markets, says conditions got so ugly at points that his team found it almost impossible to trade for days at a time.
“There has been a buyer’s strike,” he said. “And understandably so because prices have just been going down until recently.”
Drama kicked in as soon as it became clear that COVID was not going to shutter the global economy again and the world’s most influential central bank, the US Federal Reserve, was serious about raising interest rates.
Ten-year Treasury yields jumped to 1.8% from less than 1.5%, knocking 5% off MSCI’s world stocks index in January alone.
That yield is now at 3.68%, stocks are down 20% while oil prices surged 80% before giving it all up. The Fed has delivered 400bps of hikes and the European Central Bank a record 250bps, despite saying this time last year it was unlikely to budge.
The dollar this week gave the yen a lift.
In emerging markets, Turkey’s inflation and monetary policy problems have cost the lira another 28%, but its stock market is the best performer in the world.
Hard-pressed Egypt devalued its currency more than 36%. Ghana’s cedi crashed 60% as it has joined Sri Lanka in default. Despite being well down from its June highs, Russia’s rouble is still the world’s second-best performing currency supported by Moscow’s capital controls. It was initially smashed after the invasion of Ukraine.
“If you ask me what will happen next year I really couldn’t tell you,” said Close Brothers Asset Management’s Chief Investment Officer Robert Alster, who, like many, also pointed to the pummeling the pound and British bond markets took when the short-lived government of Liz Truss flirted with an unfunded spending splurge.
Ten-year gilt yields soared over 100 bps and the pound lost 9% in a matter of days — moves the scale of which are rare in major markets.
“If you sell it wrong, don’t be surprised if it goes down like a cup of cold sick,” said veteran CMC Markets’ analyst Michael Hewson.
The surge in rates has also taken $3.6 trillion off the tech titans. Facebook and Tesla have both hemorrhaged more than 60% while Alphabet’s Google and Amazon are respectively down 40% and 50%.
Chinese stocks have staged a late rally thanks to signs that its zero-COVID policy’s days are numbered but they are still down 25% and emerging market ‘hard currency’ government debt will notch its first ever back-to-back loss.
Initial public offerings and bond sales have also slumped almost everywhere apart from the Middle East, while commodities have been the best-performing asset class for a second consecutive year.
Natural gas’ more than 50% rise is the best overall in that group, albeit largely due to the war in Ukraine which had hoisted prices 140% at one point.
Mounting recession worries along with the West’s plan to stop buying Russian oil mean Brent has given back the entire 80% it made in the first quarter, as have wheat and corn.
The cryptomarket has been even more chaotic. Bitcoin ends 2022 robbed of its cocktail of cheap money and leveraged bets.
The pre-eminent cryptocurrency has lost 60% of its value, while the wider crypto market has shrunk by $1.4 trillion, squashed by the collapse of Sam Bankman-Fried’s FTX empire, Celsius and supposed ‘stablecoins’ terraUSD and Luna.
“What has gone in global markets this year has been traumatic,” said EFG Bank Chief Economist and ex-Deputy Governor of Ireland’s central bank, Stefan Gerlach.
“But if central banks hadn’t underestimated the rise in inflation so dramatically and had to jack up interest rates, it wouldn’t have been so catastrophic”.
PKR on track to become top-performing currency this month: Bloomberg
- Pakistani currency rose around 6% this month against dollar.
- Authorities curb leakages happening through illegal channels.
- Crackdown on illegal dollar traders helps local currency.
The Pakistani rupee is on track to become the top performer globally in September as the caretaker government continues its crackdown on illegal dollar trade, Bloomberg reported Thursday.
The local currency rose around 6% this month against the dollar — an amazing feat despite the Thai baht and South Korean won tumbling against the greenback.
Major currencies lost ground against the dollar on speculations that the US interest rates will stay elevated for longer.
The rupee increased 0.1% to 287.95 per dollar on Thursday, after sliding to a record low of about 307 this month. Pakistan’s currency market will remain closed for the Eid Miladun Nabi holiday on Friday.
“Many leakages were happening through illegal channels of hawala and hundi trade from the open market,” Khurram Schehzad, chief executive officer of Alpha Beta Core Solutions Pvt Ltd, told Bloomberg.
“When the dollar rate reverses everybody, the hoarders, the exporters who are holding their export proceeds, start selling their dollars,” Schehzad said.
The interim rulers have intensified efforts by launching a crackdown on people involved in the illegal dollar trade, allowing the currency to gain some lost ground.
The Federal Investigation Agency, Bloomberg reported, conducted raids across the country and security officials in plainclothes were deployed at money exchanges to monitor dollar sales as part of the crackdown.
Caretaker Prime Minister Anwaar-ul-Haq Kakar this week said the rupee’s gain is “fostering optimism for stability.”
For its part, the State Bank of Pakistan raised the capital requirements of smaller exchange companies and ordered large banks to open their own exchange companies to make the retail foreign exchange market more transparent and easier to monitor.
Pakistan issues tender for LNG cargoes to meet winter demand
inDrive now available in five more Pakistani cities
KARACHI: inDrive, a popular ride-hailing service in Pakistan, has now expanded its network to five more cities across Pakistan including Larkana, Kāmoke, Sheikhupura, Hafizabad, and Okara.
In a statement issued by the transport company, the inclusion of these cities reflects inDrive’s dedication to bringing innovative transportation options to both urban centres and suburban areas.
Speaking about the expansion, Senior Business Representative at inDrive Hasan Qureshi said: “We are excited to extend the convenience and reliability of inDrive to residents of Larkana, Kāmoke, Sheikhupura, Hafizabad, and Okara.”
“Our mission is to redefine transportation by providing safe, affordable, and accessible rides to everyone. With this expansion, we are not only enhancing the commuting experience but also contributing to the economic growth and empowerment of these communities.”
PR Manager Sidra Kiran said that their new service offers city residents the convenience of accessing transport from their homes, eliminating the need to search for it.
“Both drivers and passengers stand to gain significant benefits, including time-saving and the elimination of challenges associated with street hailing. This service addresses issues such as locating rides during odd hours like early mornings or late nights,” she stated.
She further added: “inDrive ride-hailing presents numerous benefits to drivers in small cities, including flexible opportunities, reduced unemployment, supplemental income, enhanced community connection, and positive contributions to the local economy.”
The launch of the company in these cities would benefit both riders and driver-partners.
inDrive further said that it remains committed to upholding the highest standards of safety, affordability, customer service, and technological innovation.
inDrive is Pakistan’s premier ride-hailing service and is revolutionising the way people travel. With a commitment to providing safe, affordable, and reliable transportation.
The company allowed riders to connect with nearby drivers with its app.
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