In this feature - part of the International Investment Special Report on The Bahamas 2021, Ricardo Evangelista of ActivTrades looks back on 'the greatest social experiment ever to take place during a time of peace', as the world learned to work and shop from home.
The social and technical changes we are currently living through aren't in themselves an extraordinary event. Since our evolutionary ancestors started using technology and organising themselves in increasingly complex social groups, the history of humankind has to a large extent
been the history of the struggles to adapt to the new dynamics that we either create or can't help but face. Changes are a constant, as is the need to adapt to them and, ultimately, this is what history consists of; the journey of humanity through time can only be traced by cataloguing and timestamping the evolution of knowledge and of our social dynamics, ranging from science to politics, from technological advancements to wars.
Obscure companies, of which only a few of us had previously heard about, are now familiar names. Who’d heard about Zoom before March 2020, and who hasn’t been in one of their meetings since?"
However, the pace of change appears to be accelerating. The last 12 months could almost be described as the greatest social experiment ever to take place during a time of peace; hundreds of millions discovered the advantages and disadvantages of working, shopping and socialising from home. At the same time governments were forced to inject unprecedented fiscal stimulus and almost all central banks adopted extremely accommodative monetary policies, in efforts to avoid even more pronounced economic contractions.
Thankfully, it appears that the worst may already be behind us, with most economies coming back to life or preparing to do so soon. However, according to many we won't come out the other side looking the same as we did a year ago.
The tech sector emerged as, so far, the greatest winner of the last 12 months. Obscure companies, of which only a few of us had previously heard about are now familiar names. Zoom, for example; who'd heard about them before March 2020, and who hasn't been in one of their meetings since? But it's not just the relatively newbies that managed to ride this unstoppable wave.
The business of delivering take-away meals, conveniently ordered via mobile phone apps, grew exponentially, as illustrated by the recent IPO of Just Eat, at the London Stock Exchange.
Not to mention online shopping habits, which accelerated the pace at which the segment has been catching-up and overtaking traditional bricks and mortar retail; the sales of Amazon, which last year became the world's most valuable company, increased by 44% over Q4 of 2020 in relation to the homologous period of the previous year.
Despite the promises of a return to ‘normal life' in the not too distant future, it would be naïve to expect a return to the December 2019 reality. Last year's changes will, to a still undefined extent, stay with us, creating unforeseen challenges and opportunities. Every aspect of life has been impacted; the way we shop, work, how we relate and communicate with our friends and families, our traveling habits, how we consume and interact with information and, of course, the financial markets' landscape is no exception.
For many, one of the most mystifying dynamics to emerge during 2020 has been the discrepancy between an underlying economy that remained under the strain of lockdowns and mass unemployment, and the euphoria experienced in the financial markets, with the main stock indices reaching new maximum after new maximum.
This unusual correlation is of course the fruit of a combination of various factors: The massive gains of the tech sector, with both Apple and Amazon becoming the first trillion dollar companies; gargantuan fiscal and monetary stimulus deployed by the world's governments and central banks and, last but not least, the exponential growth of the retail trading sector, with millions of furloughed workers and recipients of stimulus cheques dabbing in financial instruments for the first time.
This last point is particularly relevant for our industry, encapsulating the challenges and opportunities that online brokers such as ActivTrades faced in 2020, which ended-up being a record year in terms of trading volumes and revenues, largely because of this massive influx of new retail traders.
There is one episode, which occurred this last January, that dramatically illustrated the growing importance of retail in the financial markets: thousands of individual retail traders, communicating via Reddit, an online forum, artificially inflated the share price of GameStop, a struggling games retailer.
These amateur traders, using leveraged derivatives such as options and CFDs, successfully fought-off the short selling strategy of the Wall Street firm Melvin Capital, causing a loss of $7bn to this large hedge fund. This incident captured the attention of the global media, highlighting the growing importance of a sector that until recently had been overlooked by an industry predominantly focused on the activity of large institutional players.
2020 was a year of consolidation for ActivTrades Corp. Revenues and trading volumes increased, while the firm managed to maintain very high levels of customer satisfaction, which remained above 95%. These are achievements that one should be proud of, especially if considering the challenges of the last 12 months, which included deploying the entire work force to a home office environment, while handling record volumes of client activity.
Quickly adjusting to the evolving landscape, and with the needs of this fresh wave of traders in mind, ActivTrades launched a new analysis page which is freely available on www.activtrades.com/en/news. This new section of the company's website is updated regularly with contents that are both informative and easy to digest. The more experienced trader will certainly find value in the in-depth technical analysis and market insights, while those who are looking to learn more about the underlying forces that dictate the behaviour of financial instruments will welcome the in-house produced weekly videos, which strive to explain in layman's terms the geopolitical and economic developments that make the markets move and generate trading opportunities.
Meanwhile, at the group level, the big news was the launching of ActivTrades Europe SA. The new subsidiary was set up in Luxembourg, licenced and approved by the local regulator, the CSSF, and started operating on 1 January 2021, allowing the firm to maintain its ability to serve customers based in the key European Union market, in the aftermath of the Brexit transition period.
Finally, a word to those who make all of this possible: Amidst the torrent of changes of the last 12 months, one constant remained; I am of course referring to the professionalism and dedication of the Nassau based staff who, despite the challenging environment, ensured the smooth running of operations, contributing enormously to the success experienced by the ActivTrades group over the last year. Back in 2017, one of the reasons for choosing Nassau to establish a new hub was, alongside the global reputation of the local regulator, the availability of an educated and experienced workforce; the firm's senior management couldn't be happier with the choice and we look forward to another year of growth, knowing that we can rely on a stable and reputable regulatory environment and on the dedication and talent of our Bahamian colleagues.
Read more about ActivTrades at www.activtrades.com
About the author
Ricardo joined ActivTrades in 2011 and has undertaken a number of senior roles including running the international desk, SEO of the ActivTrades Branch in Dubai and Executive Director of ActivTrades Europe. Ricardo also acts as a regular public speaker at events and contributor to TV and other media through interviews, market analysis and generalist articles. Prior to joining ActivTrades Ricardo worked in the IT and Financial Services industries.