From cryptocurrencies to unicorn IPOs, personal finance and money themes that turned out to be duds

The year 2022 is all set to culminate in a few days. No prizes for guessing it was full of crests and troughs. There was good news along with the traces of gloom.

As you may recall as the global economy began to return to normalcy after two long years of pandemic, Russia launched a full-scale war against Ukraine on February 24, dashing the hopes of economic recovery by both optimists and pessimists. The war pushed the can of economic progress further, leaving everyone – from analysts to lay investors – stunned.

This has led to concerns about rising inflation, jump in oil prices, rising interest rates, significant fall in IT stock prices, etc.

Here, we run down some of this year’s key themes that were predicted to take off well, but fate had something else in store:

Fintech loans: Over the past couple of years, financial technology, popularly known as fintech, and in particular loans, are projected as one of the key topics to consider. Earlier this year, Buy Now Pay later (BNPL) schemes started to become quite popular among online platforms like Amazon and Uber. But the banking regulator’s notification in June put an end to all this.

The RBI issued a circular at that time that virtually prohibited non-banking companies from loading prepaid instruments like cards through lines of credit.

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Then, in September, RBI came up with a set of guidelines for digital loans, thereby preventing apps from accessing mobile phone resources such as borrowers’ files and media.

Cryptocurrencies: During Budget 2022-23, Finance Minister Nirmala Sitharaman introduced a 30 percent tax on capital gains made on crypto transactions and another one percent TDS (tax deducted at source) on crypto transactions. This dealt a big blow to investor interest, negatively affecting crypto transaction volumes on exchanges.

Bitcoin prices have also fallen a lot this year. It started on an upbeat note earlier this year when bitcoin was trading around $46,208 on global crypto exchanges, but is now trading around $16,840 (as of December 21), a drop of more than 63 percent.

The global market capitalization of these cryptocurrencies has dropped significantly in the past year. As of January 1, 2022, the total market capitalization of cryptocurrencies was over 2.24 trillion. At the end of December (December 21), it was around $810 billion, less than a third of its peak of $3 trillion in November 2021.

IT stocks: Nifty IT index gave huge returns during the pandemic period. But this year has not been so lucky for tech stocks. The Nifty IT index was trading at 38,715 on January 3, and fell to 26,880 on July 11. It also fell to 28,748 on Dec. 21, a 26 percent drop this year alone.

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Still, the IT index is overvalued with a P/E (price-to-earnings) ratio of 27.3 and P/B (price-to-book value) of 8.48 (as of November 30).

Funds that invest in shares abroad: Through a number of investment routes, investors in India are encouraged to invest in equities in global markets. But retail investors have found it difficult to spread their bets too far.

Earlier in the year, the markets regulator asked mutual fund houses to stop underwriting new subscriptions to overseas equity investment schemes.

This came after a major correction in global markets that pushed down the valuation of international stocks. The collapse in global stocks reduced the cumulative value of investments held by all mutual fund houses combined.

In 2022, eight new funds of funds (FoFs) investing overseas were launched and collectively raised a total of 414 crore in its launch month, not an impressive figure by any standards.

Paytm IPO: Although Paytm launched its IPO in the second week of November last year, the sharp fall in its price continued thereafter in 2022. And in the last year, the much sought-after IPO has lost more than 75 percent of its value, which considered the world’s worst for large IPOs in a decade, according to data compiled by Bloomberg.

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ESG funds: While more than 155 new mutual fund schemes were launched in 2022, none of them were in the ESG category. There are only a handful of active ESG funds (launched in previous years) and despite pursuing noble environmental, social and governance themes, they have failed to generate overwhelming interest among investors.

Only three funds in this category have a higher AUM (assets under management). 1,000 crore including SBI Magnum Equity ESG Fund, Kotak ESG Opportunities Fund and Axis ESG Equity Fund.

The others are relatively smaller funds and have posted negative or single-digit returns over the past year.

RBI Digital Rupee: RBI’s digital rupee was launched with much fanfare, but more than a month into the pilot project, stakeholders don’t see much benefit in the scheme.

According to a Reuters report, the e-rupee was similar to the internet-based banking that users were already comfortable with. So, using blockchain technology and projecting it as an alternative to popular cryptocurrencies is now being seen as a long leap.

However, it cannot be denied that it is still too early to come to a conclusion about the digital rupee as the jury is still out.

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These movie themes revolve around investments and money

First published: December 25, 2022, 9:31 am IST

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