Weekly Highlights

Weekly Highlights 6 Oct: Brokerage war erupts in the US

#1 Brokerage war erupt in the US

I believe it all started from Interactive Broker when they introduced IBKR Lite which charges 0 commission. Shortly after, Charles Schwab, TD Ameritrade and E*Trade followed suit respectively. Things are looking pretty good if you are a resident in the US! Buying stocks with no commission.

One can only dream that in Singapore.

Well, in Singapore, investors using local brokerages are still paying ‘sky-high’ commission. Relatively speaking. Face-palm for our local brokerages.

https://www.cnbc.com/2019/10/02/e-trade-drops-commissions-on-trades-joining-schwab-td-ameritrade-in-brokerage-fee-war.html

 

#2 Metro shut down in Hong Kong

Metro stations had to be closed due to the ongoing clashes between the police and the protestors. It seems to me that it is just a matter of time before China send any troops into the streets of Hong Kong.

Anyone who is in Hong Kong right now or is planning to go to Hong Kong for whatever reason, stay safe.

https://www.reuters.com/article/us-hongkong-protests/hong-kong-metro-system-to-remain-shut-as-city-reels-from-night-of-violent-protests-idUSKBN1WK012

 

#3 Nonfarm payroll save the week?

US markets had a relatively sluggish week, most days in the red for the first half of the week. That is before the announcement of nonfarm payroll (announcement of job creation) which took place on Friday (4 Oct). The Labour Department’s report showed the unemployment rate dropped to a 50-year low and September nonfarm payroll increased by 130k.

Most major US indices are in the green, with S&P up approx. 1.42% and Nasdaq up approx. 1.40% on Friday.

https://www.reuters.com/article/us-usa-stocks/goldilocks-jobs-data-propels-wall-st-to-best-day-since-august-idUSKBN1WJ1CB

 

#4 Can non-transparent ETFs save active managers?

This is going to take a step back for the ETF industry. One of the key advantages of investing in an ETF is transparency. The idea that an investor can go to the fund issuer website to download the holdings file and see what is in the fund at the end of the trading day is one of the reasons why many investors tilt towards ETFs.

IMO, I highly doubt that the non-transparent ETF structure can save the active managers. The only way active managers can save themselves is by outperforming the market. Sadly, changing the structure does not change the underperformance of most active managers.

They will benefit from the tax efficiency of operating an ETF. However, that alone is not going to save them.

https://www.bloomberg.com/news/articles/2019-10-01/etfs-that-hide-their-holdings-are-coming-for-your-mutual-fund

 

Have a good week ahead.

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