☀️☕️ A Global “Retirement Crisis” - BlackRock

ICMYI: We announced yesterday that due to unforeseen circumstances The MoneyFitt Morning will be taking a break from Friday, 29th March, with a return TBD. We hope you enjoy the remaining issues from us this week and have increased your knowledge of the investing world during our newsletter venture.

📝 Focus

• A Global “Retirement Crisis” - BlackRock

📊 In the Markets

• PCE on Good Friday; Nigeria’s currency crisis rate hike; KOSPI 2-year high;

• Trump Jump

• BYD’s Winning the Price War

📖 MoneyFitt Explains

• 🎓 Defined Contributions aren’t Pensions!

💸 Personal Finance Corner

• The Ultimate 101 Guide to Bonds: Everything You Need to Know

📝 Focus

A Global “Retirement Crisis” - BlackRock

BlackRock CEO Larry Fink warned of a looming "retirement crisis" in his widely-read annual letter, emphasising the need for pension and work pattern reforms due to increased longevity from medical breakthroughs, and called for collaboration between government and corporate leaders to address the savings gap.

He cited global UN projections that one in six people would be older than 65 by 2050, up from one in 11 in 2019 (and one in 17 in 2009.) Naturally, but not incorrectly, he urged greater use of the capital markets for retirement savings globally. 

Fink also highlighted the strain on the US retirement system and a lack of preparation for the rapidly growing retiree population with the rise in defined contribution plans🎓 (which the fund management industry has massively benefited from, BlackRock very much included, with over half of its $10 trillion assets under management in retirement savings.) 

..... ▷ Over the last year, the MoneyFitt Morning has addressed ageing from several other perspectives outside of retirement savings. 

Guest writers Dr Christina Chua and Steve Conley looked at the economic opportunities of The Grey Dollar and how to prepare a long and fulfilling 100-Year Life (with a Part Two) respectively. 

We also wrote bleakly about China’s demographic challenges, including its ageing population and even as Ozempic was becoming known for its weight-loss effects, we wrote about related progress in treating and reversing Alzheimer’s and other age-related dementias.

🇸🇬 Singapore: Let’s Get MoneyFitt!

📊 In the Markets

Stocks declined on Tuesday, marking the Dow and S&P 500's third consecutive drop despite modest gains late in the session. However, the major averages are still poised to end the trading month and quarter in the black when books close after Thursday trading, with Good Friday a market holiday. Markets will reopen the following Monday.

Investors are focused on upcoming economic data, including jobless claims, GDP and consumer sentiment, but are particularly awaiting the Fed’s preferred inflation gauge, the Personal Consumption Expenditures Price Index (PCE), which is due on Friday. The core reading, which excludes volatile food and energy components, is expected to come in at 0.3% higher than the previous month, up 2.8% from the same month in 2023. The headline number (which the Fed does also care about!) should come in 0.4% and 2.5% higher on the same basis. 

European markets closed higher, with the Stoxx 600 index recovering from losses earlier in the day. Retail stocks rose 1.5%, offsetting a 0.5% decline in mining stocks.

Meanwhile, the Central Bank of Nigeria raised its key interest rate by 200 basis points (each basis point is 0.01%) to tackle its currency crisis and soaring inflation, which reached 32% in February, the highest since April 1996. This is its second consecutive hike and brings the interest rate in Africa’s largest economy to 24.75%. 

Most Asia-Pacific markets saw mild gains on Tuesday, with South Korea's Kospi reaching two-year highs on strong performances by heavyweights Samsung Electronics and SK Hynix. 

Japan's Topix edged 0.11% higher as the services producer price index for February stayed at 2.1%, the same rate as in January, close to the BOJ’s inflation target rate. 

Hong Kong's Hang Seng index rose by a lucky 0.88%, led by energy and industrial stocks, while China's CSI 300 climbed 0.51%. Regulators in China are pushing banks to speed up loan approvals for private property developers in a bid to boost homebuyer sentiment after February data showed the eighth consecutive month of falling new home prices.

Trump Jump

Trump Media & Technology Group, with the ticker DJT, saw a jump of 16.1% on its first day of trading after its merger with DWAC, a black-cheque company (a SPAC) which was already up 35% in Monday trading. This now makes the former US president’s stake worth $4.6bn.

..... ▷ The new ticker DJT comes, of course, from the initials of the presumptive Republican nominee. Truth Social, its main product, emerged hastily after Donald Trump's ban from mainstream social media post-January 6, 2021 and it's unclear how and when it will ever turn a profit. 

..... ▷ Actually, this is much like the last stock to carry the DJT ticker: Trump Hotels and Casino Resorts, his Atlantic City casino venture, which went public in 1995. 

After somehow losing money for every year of its existence despite owning prime properties like the Trump Taj Mahal, it filed for bankruptcy in 2004, wiping out investors (including Trump himself.) In fact, the stock plummeted by 90% in its first five years. 

Nonetheless, Trump profited bigly, earning around $40 million in various forms, not only in salary, bonuses and options but also in consulting and licensing deals plus reimbursements for the use of his plane and golf course. 

..... ▷ Even after bankruptcy, Trump continued to profit, pocketing $6.1 million from the rebranded Trump Entertainment Resorts under a new name and ticker (TRMP), even as the company lost $2 billion over five years. 

And then filed for bankruptcy (again) in 2009. 

BYD’s Winning the Price War

China and the world’s largest EV carmaker, BYD, reported an 81% increase in full-year net profit, but fell slightly short of analysts' expectations amid heightened competition and softening demand in China and EVs in general. 

..... ▷ Warren Buffett-backed BYD logged a net profit of Rmb30bn ($4bn) in 2023, fractionally shy of the Rmb31bn expected by Shanghai’s Finest, with growth markedly slower than last year's massive 446% surge. 

..... ▷ BYD’s massive scale (over 3 million units in 2023, possibly 4 million in 2024) means it can cut prices while maintaining profitability. 

It has continued to grab market share in the Tesla-initiated price war by reducing prices across its lineup in 2024. 

After the latest round, its top-selling Qin Plus sedan is now cheaper than long time market leaders VW’s Lavida and Toyota’s Corolla in the China market, with a starting price of just $11,000.