‘The time to invest is now’ says CM Trading CEO
Top local market trends for traders
The Covid-19 pandemic severely crippled SA’s economy yet despite the economic shock, the country has started to rebound.
A recovery in global economies, a stronger rand against the US dollar, higher commodity prices, and vaccine rollouts have boosted the market sentiment in the country.
SA and the global economy is doing better than expected: why is that?
This is an interesting question because the world economy has almost got out of Covid. When looking at more advanced nations such as the UK, US and parts of Asia, vaccination rollouts have been a success and the focus is now on catching up on lost ground. Lockdown and curfew restrictions are being lifted and the economy is restarting.
However, the notion that the global economy is doing well seems kind of exaggerated. We can’t discount the fact that about 25% of the population hasn’t been working for a long time. Therefore, I don't see how people can be that positive about the near term and I would question whether things are as bright as people say.
Looking at SA, unemployment rates are substantial and vaccination efforts haven’t really taken off. That puts a big question mark on SA’s ability to bounce back. So, despite the positive outlook we’re witnessing, those that have been hardest hit by the pandemic would rightly question why that outlook exists, and not just in SA but all around the world.
As many countries, including SA, deal with a third wave, should investors be cautious?
Investors should always be cautious. Having said that, however, in times like this you see extremely high volatility. If you look at the rand/US dollar exchange rate specifically, there’s been huge volatility in the past few weeks as it went from 14.9 down to 13.4 in a short amount of time. High volatility means higher profit potential for traders and investors, but it also means higher risk.
There’s always risk in the market, but there are ways to minimise risk and different strategies for investors with different risk appetite levels. If you can adjust your trading strategy to accommodate for the increased market volatility, you stand to enjoy much higher returns compared to periods when the markets are rangebound.
What are some of the top markets investors should consider?
This is always a popular question and a difficult one to answer specifically because of Covid. The pandemic has affected where we are going and how the markets will play out. Certainly, oil has moved greatly in the last few weeks as we’re now at about $75 — a high not seen in two years.
Oil is big because we’re hoping for a global recovery specifically in the airline industry but you’re also looking at factories ramping up output as growing demand calls for increased production. It’s always good to keep a watch on bitcoin as what’s happening with cryptocurrencies is fascinating. Watching it explode past $62,000 was something few of us could ever expect as well as its inevitable correction at almost half the price.
Is bitcoin a bubble or will it continue growing?
I heard on the radio a few days ago someone saying they can see it getting to a million dollars per bitcoin, yet people are laughing. Then again, three years ago, others were saying it could hit $100,000 and nobody took them seriously, yet it just hit $62,000.
What are some of the trends you can share for the year ahead?
I’m interested in what’s going on with bitcoin and equally focused on the equity markets. Gun to my head, I can see a crash coming in Wall Street, yet I know most would disagree with me on that. I just think that there’s a bubble following Covid which inflated most stocks, and as such, I would be looking out for that.
How can South Africans get into trading?
CM Trading hosts regular webinars and publishes top-class educational packages designed as crash courses to the markets for trading beginners. Our webinars are an excellent opportunity to gain valuable trading skills and discover trading insights.
CM Trading believes in educating its clients and providing them with the best tools and an environment that is conducive to achieving consistent profitability and success in online trading. We are continuing our legacy of this through our trading education programmes.
With so many brokers out there, why should aspiring investors sign up with you?
It’s important for CM Trading clients and those that have yet to join us, to get an understanding of the psychology of how the market works. If you understand how the market works, then you’re going to have a more consistent experience and a better chance of making money in the market. Fred Razak, CM Trading chief analyst, is in a field of his own in his ability to educate people about the intricacies of the markets and how everything is connected.
My advice for traders in SA? Jump straight in, don’t be afraid to get wet, open your trading account and start building your skills as soon as possible.
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This article was paid for by CM Trading.