GEAB 123

– ICOs: Be agile, but well informed
– NEOM: The key to a new Middle East citizenship?
– Oil: Beware of dollar fluctuations
– European arms industry: All the way, with military QE ahead

ICOs: Be agile, but well informed

As we have seen in this issue of the GEAB, ICOs (Initial Coin Offerings) allow companies to launch fast and “agile” calls for funds, without investors being stuck in a fixed corporate structure. Investors are directly involved in the project and can speculate on its future value, rather than on the financing of the structure. The 2017 market was relatively turbulent with a lot of dubious offers and speculation which led to a sudden correction. To date, the majority of crypto-currencies are still being depreciated[1]. It is therefore with much more sophisticated and cautious investors that the ICO market opens up in 2018; particularly so with the more vigilant institutional observers. However, before embarking on this sort of operation, we must check who the players are; their background and reputation; the origin of the project; its seniority etc. If it has already been the subject of an ICO to raise funds, then for how long, over what period, how much was raised, how successful it was, and so on and so forth. You can of course take up calls for tenders from start-ups and other micro-structures whose proximity allows you to appreciate both their seriousness and potential opportunities.

Figure 1 – Number of ICOs and amounts collected 2017/2018. Source Canardcoincoin

NEOM: The key to a new Middle East citizenship?

This mega project, whose investment needs were valued at $500 billion, will be irresistible for many investors no matter their sectors. No doubt it will attract many people. We invite you to closely monitor the evolution of the Yemen and Iran issues, as well as the progress of this project; to appreciate the first calls for funds (most certainly also in the form of ICOs)  and, why not buy your NEOM citizen card (if the project is inspired by that of the Estonian government).

Oil: Beware of dollar fluctuations

We maintain our oil prices anticipation of around $50 by May[2], especially since US oil and gas will not participate in the policy of restricting production[3]; the US market being in need of cheap energy resources for the homes and poorer parts of the economy. As we describe in this GEAB issue, OPEC will not last long and Venezuela could enter the market right after the presidential election next May. Finally, the last item to watch closely is the progress of the dollar because an oil price that appears at $50 today will be devalued according to the price of the dollar itself. And so, we can no longer count on these published values…

European arms industry: All the way, with military QE ahead

If it is true that the North American defence sector is a treasure-trove of high-potential stock securities, and that Russia is also not to be ignored as it demonstrates its military resources, we must also closely monitor the defence sector in Europe. Military Quantitative Easing is playing hard and defence investment is increasing in most European states[4], boosted by the work of member states to move forward in new military cooperation. It is indeed a refocusing by the European states around Permanent Structured Defence Cooperation (PESCO), promoting the development of an independent European arms industry in relation to the transatlantic axis, which signed of on the act and the first 17 collaborative projects on March 6, 2018[5]. Needless to say that many sectors may be positively impacted along with the European-wide financial investment policies, such as the EIB Bank, which will support the defence industry in Europe with a further 6 billion euro of funding[6].

Read all the GEAB 123

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[1]  See Coincheckup

[2]  Even though Moody raised its forecast from 40/60 to 45/65. Source: Boursorama, 14/03/2018

[3]  That would be the opposite, and for once, IEA and EIA do agree. Source: Market Watch, 14/03/2018

[4]  See the SIPRI report on arms sales, France, Germany 3rd and 4th. Source: SIPRI, 12/03/2018. In Belgium, the country wants to quintuple its military expenditure. Source: Mondialisation, 04/03/2018

[5]  Source: FOB, 07/03/2017. The 17 projects: « Permanent Structured Cooperation (PESCO) first collaborative PESCO projects – Overview », Source: European Council. We can only emphasize that this decision divested the European Commission of the question of European defence. Military affairs remain a national issue.

[6]  Source: Handelsblatt, 01/03/2018