WWN#41 – Aussie Stock Market Plunges: Should You Buy, Hold or Sell?

ASX200 February Fall.png

Source:  Yahoo Finance

What’s Been Happening?

At the beginning of February, the benchmark 10-year bond yield rose to a four-year high on the back of positive payroll data being released in America. With wages rising and unemployment falling, the data acted as a signal to many that the U.S. was inevitably about to start increasing interest rates.

A week prior to the news, the Dow Jones Industrial Average had its highest closing record of 26,616.71 set on January 26. This meant investors were already quite cautious of a pull-back and inevitably the release of positive economic data triggered an immediate sell-off in the stock markets there and around the world.

After falling slightly on Monday, the Australian stock market had one of their worst trading sessions with $56 billion in value wiped off the stock market on Tuesday. The S&P/ASX 200 dropped 3.2% which makes it the worst one day fall since September 2015. There was some reprieve on the following day as bargain hunters came in and stabilised the market which recovered about 1.2%.

What Now?

On Thursday night, the sell-off on Wall Street deepened and the Dow Jones Industrial Average lost 4.2%, taking the losses since last Friday past 10 percent, the definition of a correction. That led to renewed selling on Friday for Australian shares, albeit it was only a 0.9 percent drop to finish the session at 5838 points. Over the week, the cumulative losses add up to 4.6% and the total value of the Australia sharemarket has dropped by more than 70 billion.

What’s Next?

Is it time to buy? Focus on the Fundamentals

Head of equities research at Morningstar, Peter Warnes, has commented that: “It’s way too early to go bargain hunting” as there will be reliefs but more downside is likely to develop over the next few weeks. Investors are likely to wary as volatility remains high.

Having said that, stock market pull-backs can be an advantageous time for investors to pick up stock more cheaply. During periods of volatility, individual stocks are more likely to outperform the market especially as the reporting season has begun in Australia and companies have started to report their half yearly earnings.

Is it time to hold?

Currently, we are in correction territory and corrections are generally temporary in nature. Although the U.S. political situation is a mess, the U.S. economy is actually doing fine (higher wage growth and lower unemployment) and therefore there is no definitive cause to be alarmed. Unless you have reason to believe that a stock will never reach that price again, it would be silly to sell now and lock in losses.

Is it time to sell?

Now is not the time to panic sell. Compared to overseas markets, the losses sustained in the Australian stockmarket are mild. It’s still $44 billion ahead of where it was this time last year and $220 billion ahead of where it was three years ago. Furthermore, even if there are a couple of rate rises, the interest rate is still relatively low in historical terms. In Australia, reporting season has only just begun and there are expectations that corporate earnings should rise by about 7% or so which should support stock prices that have not risen as sharply as in the U.S.

In Warren Buffet’s memorable words: “Be fearful when others are greedy and greedy when others are fearful.”


WWN#40 – South Korea Qualifies Ban on BitCoin!

South Korea Ban Bitcoin.png

What’s Been Happening?

In late 2017, the Korean government had been making it very clear that they wanted to bring the speculative activity of cryptocurrency trading under control through its warnings that it would be conducting on-site investigations of exchanges and looking at a “cryptocurrency tax”.

On Thursday, South Korea’s justice minister Park Sang-Ki was reported to have said that the justice ministry is “basically preparing a bill to ban cryptocurrency trading through exchanges”. The announcement sent bitcoin plummeting by as much as 21 percent and nearly all other cryptocurrencies saw significant losses. South Korea is a major hub for virtual currency transactions, where they account for more than 20% of all bitcoin trading and more than one third of South Korean adults hold some form of cryptocurrency.

Just a few days earlier, a popular cryptocurrency price tracker CoinMarketCap removed prices from South Korean exchanges because the coins were trading at a premium of about 30 percent compared to other countries. This likely led to more confusion than necessary and triggered a broad selloff among investors.

What Now?

The statement made by Park Sang-Ki was later moderated by the presidential office on the following day which said a ban was under review but no policy changes had been made as it was only one proposal under consideration. A petition on the website of the presidential Blue House has drawn more than 120,000 signatures opposing the ban.

The Ministry of Justice apparently made the independent announcement without the consent of the Ministry of Finance and Strategy and other government agencies involved in the South Korean cryptocurrency regulation task force.

What’s Next?

In light of the government’s announcement that cryptocurrency will not be banned in the near future, it is likely that the South Korean government will move towards regulating and fostering the local cryptocurrency market.

A spokesperson last year said that regulatory roadmaps set by other countries such as Japan and U.S. are likely to be followed so it is unlikely that a cryptocurrency trading ban will be imposed in the long-term as well. With more and more investors seemingly jumping in to cryptocurrency craze in Korea from college students to housewives, there needs to be a push for stronger regulatory requirements especially from the exchanges that foster cryptocurrency trading (e.g. Coinone and Bithumb in Korea).


WWN#39 – Apple To Buy Mobile App Shazam

What’s Been Happening?

Founded in 1999, Shazam is the company that invented an app by the same name that can identify music, movies, advertising and television shows by using the microphone on a smartphone or computer based on a short sample played. It then sends information such as the artist, song title and album back to the user and directs them to services where the full song or sound clip can be found such as ITunes, Spotify or YouTube.

Since 2013, it has consistently maintained a top ten spot in ITunes’ most downloaded list and has exceed 1 billion downloads to date. It also has more than 175 million monthly active users globally across IOS and Android. The US is the largest single market with about 20 million active users in November this year while the UK had about 4 million in the same month.

What Now?

Apple has acquired Shazam to the tune of about $US400 million ($AU531 million) for the UK-based start-up.

The deal was announced on Monday and would come as a disappointment for some of Shazam’s investors as the company was previously valued at about $US 1 billion when it closed its last funding round in 2015.

“Apple Music and Shazam are a natural fit, sharing a passion for music discovery and delivering great music experiences to our users”, Apple said in an emailed statement.

What’s Next? It’s all about the data

The acquisition of Shazam will be a potential benefit to Apple’s upcoming HomePod speaker.

However, the real opportunity isn’t just about adding music recognition capabilities to Apple’s existing product pipeline, it’s the provision of a wealth of Shazam user data that Apple can analyse and utilise. It can act as an early warning system to identify music trends or discover which songs are starting to get popular. It can also now potentially use the data from Shazam to see which songs lead to an Apple Music subscription or other subscriptions.

It’s therefore highly unlikely that Apple will discontinue the standalone Shazam app. The fact that there is a 3.5 billion internet-connected consumers who aren’t paying for music streaming means that there is a very large untapped market for Apple Music. Shazam could prove to be the mainstream audience accelerator that Apple Music obviously needs.


WWN#38 – Same-Sex Marriage Legalised in Australia!

What’s Been Happening?

In May 2004, the Howard government expressly prohibited the legislation of same-sex marriage by introducing the Marriage Amendment Act in Parliament. The amendment specified that marriage, would be defined as a “union of a man and a woman to the exclusion of all others”.

Over the next decade or so, legislation was passed so that discrimination against same-sex couples in areas of tax, social security and health and adoption were gradually removed.

In August this year, a non-compulsory national postal survey (also known as plebiscite) was conducted in order to gauge whether people supported the notion of changing the law to allow same-sex couples to marry. Respondents were asked to mark one box – Yes or No on the survey form. 80% of total registered voters (16,006,180) returned the form with 61.6% voting Yes and 38.4% voting No. Having given the public a say, it was felt by most members of parliament (MPs) that the verdict must be reflected in law.

What Now? 

Australia has officially become the 26th country to legalise same-sex marriage after the Marriage Amendment (Definitions and Religious Freedoms) Bill was passed in the Senate last week and House of Representatives on the 7th of December. An overwhelming majority of MPs voted in favour of the Bill, with four voting No and around nine abstained.

The new law changes the definition of marriage in the Marriage Act by removing the words “a man and a woman” and replacing them with “the union of 2 people”. This was the minimum required reform to enable same-sex marriage.

When the vote was declared on the floor of the House, the public gallery exploded into cheers and applause and eventually burst into a rendition of the song, “I am, you are, we are Australian”. Prime Minister Malcolm Turnbull was equally jubilant as he declared, “Australia has done it. What a day for love, for equality, for respect. This has been a great, unifying day in our history.”

Malcolm Turnbull SSM.jpg

What’s Next?

It is certainly cause for celebration that Australia has finally embraced marriage equality. Thousands of Australians who married in overseas jurisdictions will have their vows recognised under Australian law and the first same-sex weddings will be able to occur from January 9, 2018. However, it is not the end of the road when it comes to law reform.

There are still other issues that require attention and discussion which continue to affect same-sex people:

  • Birth certificates that accurately reflect a child’s family structure (e.g. four parents)
  • Controversial conversion therapies that attempt to “cure” a person’s same sex attraction
  • Protection of religious freedom or is it discrimination on the basis of sexual orientation?

WWN#37 – SendGrid’s IPO Soars on Debut


What’s Been Happening?

SendGrid, a Colorado tech company in the United States, was founded in 2009 by three developers: Isaac Saldana, Jose Lopez and Tim Jenkins. Only one of its three founders (Saldana) still has a big enough stake in SendGrid to be among the shareholders who own 5% or more of the company.

It is a cloud-based email delivery service that assists over 55,000 paying customers (e.g. Uber, Spotify & Airbnb) to send more than 30 billion emails every month.

SendGrid manages transactional email such as purchase receipts, password resets, account creation in addition to email marketing in the form of promotions and email newsletters.

In November 2016, they had a venture capital raising that amounted to $33 million, bringing its total venture funding to $80 million.

What Now?

SendGrid IPO Debut

On the 16th of November, the company made its public debut on the New York Stock Exchange (NYSE: SEND). SendGrid said earlier this month that it planned to sell 7.7 million shares, priced between $13.50 and $15.50 per share. Prior to going public, it increased both those figures, ultimately offering 8.2 million shares at $16. The stock popped 14% to $18 on its first day of trading, giving the company a market capitalisation of $734 million.

What’s Next?

Despite the success of its IPO, SendGrid is still very much a “show me” story as it isn’t profitable yet. Although its revenues have risen year on year with sales hitting $80.2 million in its first nine months of 2017, net losses also grew to $4.7 million in the same period.

At the current share price, the company’s risk profile is too high and banks too much on the staying power of email, like its competitors MailChimp and SparkPost. But for now, with 54% of the planet (3.7 billion people) still using email, it’s hard to imagine a world that is without email anytime soon.


WWN#36 – What’s Different? IPhone X Released

What’s Been Happening?

The iPhone 8 and 8 Plus were released on the 22nd September this year. Compared to its predecessor, the screen, display and cameras were left largely unchanged. The biggest visible difference would be the glass back which replaces the aluminium used in previous versions. It was a necessity as the new wireless charging feature would not have been possible without it. Inside the IPhone 8, there is an A11 Bionic chip that has been touted by Apple to be 25% faster than the previous A10 chip.

In terms of battery life, the battery on the IPhone 8 is actually smaller than the 7 but optimisations on the new chip seems to make it last longer. Overall, the updates are all quite small.

What Now?

Price Guide IPhone 7 IPhone 7 Plus IPhone 8 IPhone 8 Plus IPhone X
Minimum Price (in AUD) $849 $1049 $1079 $1229 $1579

On the 3rd of November, the IPhone X was released to Australia. More than four hundred people lined the streets around Apple’s flagship Sydney store proving it to be significantly more popular than the IPhone 8 despite the $350 price hike. If I was to describe the IPhone X in a sentence: the IPhone X is the IPhone 8 Plus but with all of its features crammed into a body that’s closer to the size of an IPhone 8. However, there are also a few new distinctive features:

  • Face ID – Unlike Samsung’s attempts at facial recognition which have been insecure to date, Apple’s Face ID actually seems to work well. As one user reported, the phone can still recognise you even if you wear a fake beard or glasses. And instead of a one in fifty thousand chance that someone would be able to open your phone with their fingerprint, with Face ID that becomes a one in a million chance. Face ID replaces the fingerprint reader “Touch ID” with the home button being removed.
  • Super Retina Display – At 458 pixels per inch, the resolution is crisper than the IPhone 8 Plus and IPhone 8 (401 and 326 ppi respectively). Without getting too technical, this has been made possible by Apple’s switch from an LCD panel to an OLED display panel.

Notable Mentions:

  • Battery life on the X is purported to be two hours longer than the IPhone 8 (14 hours vs. 12 hours).
  • Dual Cameras – According to Business Insider, the cameras on the back have markedly improved with dual optical image stabilisation which make for less blur, particularly noticeable in videos. The front-facing “TrueDepth” camera with all of its different components makes selfies look more like professional photos.

TrueDepth Camera

Unfortunately the IPhone X stock will be extremely limited until well into 2018 as Apple has reportedly run into significant problems mass producing the “TrueDepth” camera sensor. So for the people who did not line up for an IPhone X on launch date, you may have to wait a few months longer for this one.

What’s Next?

  • Until now, Apple has followed a vaguely chronological naming convention. As we’ve reached 10, it is unlikely that the next IPhone will be called IPhone 9. The big question is whether the next one will be IPhone 11 or will Apple invent a new name?
  • Better displays, better cameras and better processors. It’s likely that the next-generation IPhone for 2018 will contain at least some improvement in one of these areas as Apple has achieved this with every new IPhone release. It’s hard to see though how this can be done next year without increasing the size or weight of the IPhone.
  • The introduction of animated emojis “Animoji” in the X signal that further development in augmented reality is likely. There are already applications available within the App Store that you can download and use that incorporate augmented reality functionality (e.g. IKEA Place lets you visualise its furniture in your home).
  • Although the chances are very slim, I can only hope that the next IPhone will be cheaper than the X…


WWN#35 – Changes Overdue for CBA’s Compliance, Customers and Culture

 Commbank’s latest initiative – Rewarding Service and not Sales

What’s Been Happening?


  • Commonwealth Bank accused of ‘serious and systemic’ breaches of anti-money laundering and terrorism financing laws by AUSTRAC. For each of the 53,700 contraventions, the maximum penalty is up to $18 million. $8.9 billion was deposited through CBA’s intelligent deposit machines before the bank conducted a money laundering risk assessment.
  • A week after the scandal was made public, the Commonwealth Bank’s board has announced a cut to executive pay and short-term bonuses for the financial year that ended.
  • In mid-August, the bank announced the retirement of CEO Ian Narev who will leave before July 2018.


  • Perhaps in an effort to improve its image, CBA announced in late September that it will remove ATM fees charged to non-customers for using its ATMs which was followed in quick succession by Westpac, ANZ and NAB. As a result, fees will be abolished at 3400 CommBank machines, 2300 ANZ machines, 2925 Westpac machines and 1300 NAB machines.


  • In early October, rumours of a class action led by Maurice Blackburn against Commonwealth Bank for the AUSTRAC debacle became reality following the announcement that the funding for the litigation by IMF Bentham was now unconditional.
  • Scathing criticism came from the country’s largest consumer group, CHOICE, about the Commonwealth Bank’s Dollarmites scheme which allowed “kickbacks” to schools to “flog their products”. CBA also pays schools $5 for every account opened via the program, and 5 per cent of every deposit made at school, up to a maximum of $10 per deposit.

What Now?

Last Friday (13th of October), CBA announced that it would immediately remove “financial outcomes” from a bank teller’s performance assessment criteria, with customer service being the sole measure of a teller’s performance.

This is seen as the latest move by the bank to endear itself to customers and shareholders following the AUSTRAC money-laundering scandal and the call to ban the bank’s Dollarmites program by CHOICE.

Executive General Manager, Angus Sullivan, said “the new remuneration plan will support and encourage [our staff] to have better quality conversations with customers, understand their needs and provide the best possible service”.

What’s Next?

Moving away from sales-based incentives and recognition programs and towards value-based rewards is certainly a step in the right direction. As Australia’s largest bank, it will still take a number of changes before the bank can be back in the spotlight for all of the right reasons instead of wrong ones.

In her opening statement before the House of Representatives in Canberra, CBA Chairwoman Catherine Livingstone outlined the renewed focus for the bank in:

  • Encouraging a customer-centric mindset that is shared by both management and employees across the company so that customers’ needs are met and outcomes are improved.
  • Reviewing and implementing better monitoring procedures for cash transactions, especially ones that flow through the IDMs.
  • Meeting and exceeding overall compliance obligations to AUSTRAC
  • Fostering an organisational culture that strengthens accountability and compliance